| Title | Quarter | Read Transcript | Audio |
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Conference Call Recording
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Q1 FY26
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Read Transcript
<h3>Moderator:</h3>
<p>Ladies and gentlemen, good day and welcome to the Bharat Petroleum Corporation Limited Q1 FY '26 Earnings Conference Call hosted by Antique Stock Broking Limited.</p>
<p>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 ‘*’ and then ‘0’ on your touchtone phone. Please note that this conference is being recorded.</p>
<p>I now hand the conference over to Mr. Vartharajan from Antique Stock Broking Limited. Thank you and over to you, sir.</p>
<h3 class="underline_top">Varatharajan:</h3>
<p>Thank you. A very good morning to everyone. I would like to welcome all the participants and the BPCL senior management team to this call.</p>
<p>We have with us Mr. V. R. K. Gupta - Director (Finance); Mr. Pankaj Kumar - ED (Corporate Finance); Ms. Srividya - ED (Corporate Treasury); Ms. Chanda Negi – GM (Pricing and Insurance) and Mr. Balagirish – Senior Manager Finance.</p>
<p>I would like to hand over the call to Bala for the disclaimer and then opening remarks by the team.</p>
<h3 class="underline_top">Balagirish J:</h3>
<p>Thank you, Mr. Varatharajan. Good morning, everyone. On behalf of the BPCL team, I welcome you all to this post-Q1 Results Con-call.</p>
<p>Before we begin, I would like to mention that some of the statements that we would be making during this concall are based on our assessments of the matter and we believe that these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. Since this is a quarterly results review, please restrict your questions to the Q1 results.</p>
<p>I now request our Director Finance, Mr. V. R. K. Gupta, who is leading the BPCL team for this call to make his opening remarks. Thank you and over to you, sir.</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Good morning, everyone. Welcome to the post-Q1 Results Concall. Thank you for joining us today. I hope you were able to go through our Results for the quarter.</p>
<p>On the macro side, global growth prospects have strengthened with the IMF in July 2025, upgrading its 2025 forecast to 3% and India's FY '25 growth outlook to 6.4%, reflecting resilient trade activity, robust domestic demand and sustained reforms...</p>
<p>RBI has retained GDP growth forecast at 6.5% for the current fiscal in its latest MPC meeting, citing strong domestic demand and economic resilience. Despite risks posed by recent US tariffs, it expressed confidence that ongoing trade negotiations will help ease these pressures.</p>
<p>In Q1 FY '25-26, the rupee appreciated 1.2% quarter-on-quarter to 85.56 per USD from 86.62 in Q4, driven by strong foreign inflows, a weaker USD and easing geopolitical tensions. However, it now trades near historical lows amid US-India tariff concerns and sustained FPI outflows. After weakening to 87.79 USD on August 5, it recovered slightly on a softer USD ahead of US-Russia talks.</p>
<p>IEA forecasts global oil demand to increase by 2.5 million barrels per day between 2024 and 2030, with demand expected to reach 105.6 million barrels per day by 2029, followed by a slight decline in 2030.</p>
<p>Within this context, India is projected to be the largest contributor to demand growth, with its oil consumption rising by 1 million barrels per day at an average annual rate of around 2.8%, outpacing all other countries during this period. Oil prices have remained volatile amidst the recent tariff announcement and a series of OPEC plus production hikes. As per EIA's latest projection, Brent is likely to be 67–68 barrels in 2025. Domestic petroleum product demand grew in Q1 with petrol by 7.1%, diesel 2.6% and ATF up by 3.9% as per PPAC.</p>
<h3 class="underline_top">Coming to the performance in Q1 of 2025-26:</h3>
<h3 class="underline_top">Operations:</h3>
<p>Our refineries processed 10.42 million metric tons of crude, achieving 118% of nameplate capacity. We have achieved a distillate yield of 84.96%, consistently above benchmark, owing to our complex refinery configuration and strong operational efficiencies.</p>
<p>Product crack for gasoline was $9.88/barrel and for gas oil $15.81/barrel for Q1 during this period. Accordingly, our refineries recorded a GRM of $4.88 per barrel in the current quarter, as compared to $7.86 per barrel in Q1 of 24-25.</p>
<p>BPCL has always been evaluating crude grades from across global geographies, selecting those that maximize value in line with refinery configuration and product demand. In the current environment of narrowing discounts for Russian crude, the company's agile sourcing strategy has enabled procurement of alternative grades from Brazil, the US, West Africa and other regions, guided by economic and market conditions, and maintaining a competitive edge in crude selection.</p>
<h3 class="underline_top">Marketing:</h3>
<p>Our domestic market sales grew by 3.19% year-on-year during this quarter to 13.58 MMT. Further, as compared to Q4 of 24-25, we recorded a growth of 6.6% in MS and 3.2% in HSD in Q1.</p>
<p>During the quarter, we commissioned 317 NROs and 99 CNG stations, taking total RO network to 23,958 and CNG stations network to 2,607 stations. We aim to expand our RO network to 25,000 by the end of this current financial year.</p>
<h3 class="underline_top">Retail Operations & Digital Initiatives:</h3>
<p>We maintained our leadership in throughput per RO at 153 KL per month for Q1 2025-26, outperforming the PSU average, driven by strategic market access and strong highway presence.</p>
<p>In a positive development for the OMCs, the Government has announced Rs. 30,000 crore compensation towards the under-recovery and sale of domestic LPG, which is expected to be paid in different tranches. With further details awaited on the payout, BPCL’s total negative buffer before the impact of the said compensation is Rs. 12,523 crore as of June ‘25-26. We have not yet accounted anything against this particular compensation announced.</p>
<p>Through our industry-first digital initiative of a QR code-based payment mechanism at our ROUfill, we have covered 15,000 plus retail outlets with a daily 6 lakh transactions valued at Rs. 30 crore per day. AI-driven IRIS platform is an intelligent system that enables us to remotely manage retail outlet operations, safeguarding both quality and quantity at the outlet. IRIS is activated at 19,000 retail outlets. Across businesses, BPCL is advancing digital transformation using real-time data under several initiatives to streamline operations, reducing turnaround time and enhancing customer experience.</p>
<h3 class="underline_top">Biofuels & Energy Security:</h3>
<p>In line with Government's energy security agenda and efforts to reduce import dependence through biofuels, ethanol blending levels of BPCL for Q1 25-26 stood at 19.62%.</p>
<h3 class="underline_top">Gas Business & EV Initiatives:</h3>
<p>Under the gas business, we have achieved a total sales volume of 338 TMT, 9% on a quarter-on-quarter basis during the year, for CNG, PNG and bulk sales in our own GAs. Further, through our retail channels, we have sold 269 TMT in Q1 25-26. We also received our first cargo under a long-term supply agreement with ADNOC linked to Henry Hub Index in Q1 25-26, diversifying our long-term sourcing strategy beyond Brent-linked term contracts.</p>
<p>We added 839 EV charging stations during Q1, taking total network to 7,402 EV charging stations.</p>
<h3 class="underline_top">New Projects:</h3>
<p><strong>Bina Petrochemical and Refinery Expansion project:</strong> Has made steady progress, achieving overall progress of around 14%, as against a schedule of 15.9%. We have incurred expenditure of approximately Rs. 1,800 crores, with overall commitment of Rs. 6,800 crores. All technology licensors and consultants are onboarded, and process packages for all units received and frontend engineering design has been completed. Detailed engineering and procurement are underway, with tenders for critical equipment and EPC packages floated, and key long-term items such as ECU compressor and furnace packages have been awarded. Site enabling works are also nearing completion.</p>
<p>As a step towards digitization, we launched Digi-BPREP, our industry-first digital platform for the project, enabling real-time progress monitoring and enhanced transparency.</p>
<p><strong>Polypropylene project at Kochi:</strong> Achieved a physical progress of 12.2%, as against a schedule of 16%, with an expenditure of Rs. 260 crores and overall commitment of Rs. 1,200 crores. Licensor selection and basic design engineering activities have been completed. Orders for 6 major long-lead items have been placed. The EPC tender, which is the major activity for the PP unit, is underway.</p>
<p><strong>Petro-Residue Fluidized Catalytic Cracking Unit at Mumbai Refinery:</strong> Approved by the Board, at a gross capital cost of Rs. 14,200 crores, with expected mechanical completion by May 2029. The project will replace the old CCU and FCC units at Mumbai Refinery, which are over 40 years old. This will help MR achieve residue upgradation, increase transportation fuel production, provide flexibility of processing higher proportions of high-sulfur crudes, and reduce environmental impact, thus also increasing overall yields of BPCL group refineries.</p>
<h3 class="underline_top">Greenfield Refinery & Pre-Project Approvals:</h3>
<p>During the last year, the Board has approved Rs. 6,100 crores towards pre-project activities, including land identification and acquisition, feasibility studies, and environmental assessment for the Greenfield refinery cum petrochemical complex in Andhra Pradesh. Detailed feasibility study of the project is in progress. Land acquisition is also in progress.</p>
<h3 class="underline_top">Green Energy Initiatives:</h3>
<p>BPCL has awarded contracts for setting up 100 MW wind farm projects, 50 MW each in Madhya Pradesh and Maharashtra, as part of its strategy to transition to renewable energy and reduce reliance on imported fossil power. The LOAs have been issued to M/s Suzlon Energy Limited and M/s Integram Energy Limited with completion and commissioning targeted within 2 years.</p>
<p>As informed earlier, based on the approvals in previous quarters, BPCL has constituted joint venture NeuEn Green Energy with Sembcorp Green Hydrogen Private Limited for setting up renewable energy and green hydrogen assets.</p>
<p>Two projects, Ground Mounted Solar Project at Prayagraj and Integrated Green Hydrogen Plant and Hydrogen Refueling Station in Kochi are expected to be commissioned during the next 2–3 months. We have prioritized setting up of 26 CBG plants, out of which 10 are direct investments, where the location has been identified and activities have commenced. Further, 16 CBG plants are proposed to be set up through our joint venture Bharat GPS Bioenergy Private Limited and the proposed JV with Praj Industries.</p>
<h3 class="underline_top">Financial Highlights for the Quarter:</h3>
<p>The revenue from operations stood at Rs. 1,29,578 crore, the standalone profit after tax stood at Rs. 6,124 crore and the consolidated profit after tax was Rs. 6,839 crore.</p>
<p>Against an estimated CAPEX of Rs. 20,000 crores during this financial year, we have spent about Rs. 2,382 crores during Q1. Our standalone net worth as on 30th June 2025 is Rs. 87,377 crore. The earnings per share for the quarter is Rs. 14.33 per share.</p>
<p>As of June ‘25, the debt equity at standalone gross borrowing level is 0.12. Overall, standalone gross borrowing is Rs. 10,709 crore as on 30th June 2025. Against this, we have current investments including surplus funds in oil bonds of about Rs. 17,580 crore, placing us at a net surplus on a standalone basis. At group level, debt equity is 0.44. With gross borrowings of Rs. 39,452 crore, debt equity ratio net of current investments at group level will be around 0.25.</p>
<p>This concludes my comments and we will be happy to take your questions now. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Very good morning, sir. Thanks for the opportunity. Just to clarify the last bit that you just mentioned, on the group debt level, you said the group debt equity ratio on gross is 0.4 and what was the debt level at group level, sir? I didn't catch the number?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>It is Rs. 39,452 crores at group level debt.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Rs. 39,452 crore and on a net level, it is around 0.25. That is what you said, sir?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes. We have surplus funds invested around Rs. 17,580 crore.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Understood. So I had a few questions. First was, you mentioned that due to the uneconomic nature of Russian crude, we have procured from other sources. So can you just quantify what the Russian crude percentage was in this quarter and also the inventory impact, if any, if you can quantify for this quarter in the GRM?</p>
<h3 class="underline_top">Q&A Session (Continued):</h3>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>This quarter, Russian crude procurement is around 34% for April, May, June quarter. In terms of inventory levels, we have kept a little bit more inventories in the month of March and April because of geopolitical issues and concerns. So our inventory levels are on a slightly higher side. In March 2025, our total quantity of crude oil and inventory levels was 2.9 MMT whereas generally, we keep around 2.3–2.4 MMT. But this quarter, March and June, our inventory levels are around 2.9–3 MMT of crude.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>And what does that translate to, sir, in terms of dollars per barrel impact in this quarter GRM?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>So, per barrel impact, we generally do not calculate. Generally, against normal standard inventory, around 22%-25% extra inventory was kept.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Understood, sir. The other question I had, sir, was if we look at this quarter numbers, despite the decline in Q-o-Q, I am talking about on a sequential basis versus Q4, your GRMs have declined quite sharply. And while retail fuel margins were fairly strong, even then the marketing earnings seem to be very robust in this quarter, given the inventory loss also that was there. I just wanted to understand, is this strength only from retail fuels or other product margins have also seen some strength in this quarter?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Mainly retail fuels only. Other products’ marketing margins are at standard level, normally same levels. There is no big change in terms of marketing margin. But retail fuels definitely on account of low crude prices and no change in the RSPs, our margins are better and LPG losses have also come down.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Right, got it, and the lower LPG losses would have… Sir, LPG on a per cylinder basis, what is the kind of loss you have seen last quarter and right now, if you can just let us know?</p>
<h3 class="underline_top">Chanda Negi:</h3>
<p>For the month of July, it is around Rs. 100 per cylinder, and going forward, July–August and September, it is around Rs. 30.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>And what was it in Q1, ma'am?</p>
<h3 class="underline_top">Chanda Negi:</h3>
<p>Q1 is around Rs. 150 per cylinder.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Last question, if I can squeeze, can you give us the CAPEX guidance for FY '26 and FY '27?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>For FY '26, our estimated Capex is Rs. 20,000 crores. Till June, we have spent around Rs. 2,300 crores. The progress is going on well. By the end of this year, we expect to achieve the Rs. 20,000 crores target. For next year, FY '27, we are expecting around Rs. 20,000 to Rs. 25,000 crores. We have not firmed up the numbers but are estimating somewhere between Rs. 22,000 to Rs. 25,000 crores.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Right, sir. Thank you so much. I will come back if I have more questions.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Yash Nandwani from IIFL Capital. Please go ahead.</p>
<h3 class="underline_top">Yash Nandwani:</h3>
<p>Thanks for the opportunity. Sir, the Bina Refinery reported GRM of only $4.5 per barrel in this quarter, which is notably lower than its usual trend of outperforming the Kochi Refinery. So is it just because of lower Russian crude and inventory losses or are there any specific reasons for the same?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>The major reason is our inventory build-up during this month due to geopolitical issues. So definitely, there is an impact of high inventory carrying cost in the subsequent months’ processing. That is the major reason. Otherwise, Russian crude, in terms of the percentage of Russian crude, there is no big change—maybe 2%-3% quarter-on-quarter, but otherwise similar trends. Also, the Russian crude discount compared to earlier quarters has come down to almost $1.5 level. These are the couple of reasons, but the major impact is on account of inventory build-up.</p>
<h3 class="underline_top">Q&A Session (Continued):</h3>
<h3 class="underline_top">Yash Nandwani:</h3>
<p>And sir, with crude prices now trending below $70 per barrel and OMC also getting the compensation for LPG, are there any discussions underway regarding a cut in the auto-fuel prices?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>No. At this point of time, there is no discussion at all. If you see, geopolitical tensions are still uncertain. We don't know how the trend will change suddenly. We have to wait and see for some more time.</p>
<h3 class="underline_top">Yash Nandwani:</h3>
<p>And lastly, with respect to Mozambique asset, could you walk us through the expected timeline for the restart?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>We are expecting this quarter. Definitely, there should be some positive news. Because whatever the revised project cost, we are requesting the Mozambique Government to consider it for allowing that expenditure. That audit work is ongoing. Maybe by the end of this month or next month, we are expecting certain positive news.</p>
<h3 class="underline_top">Yash Nandwani:</h3>
<p>Thanks a lot.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Thanks for giving me an opportunity, sir. Sir, what is your understanding on LPG compensation, which will be in 12 tranches? Is it a 12-month or some other time period? My second question is, how much share of LPG compensation will you account in FY '26 and FY '27? Could you give some clarity on this matter?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Whatever information is available through PIB, OMC has got Rs. 30,000 crore grant. We are awaiting the operating modalities and how the compensation mechanism happens. We have not received any communication from the MOPNG whether it is over a period of 12 months or 24 months. Once we receive the details, we can share the impact accordingly. From a market share point of view, BPCL is expecting at least 25%-26% since we have that market share. So our compensation should be within the same level of market share percentage.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Sir, my second question is again on the debt side. There is a sharp decline in gross debt. Considering the EBITDA of this quarter at Rs. 9,600 crores and the CAPEX lineup of Rs. 20,000 crores, which is slightly higher next year, are there any particular net debt to EBITDA or debt to equity levels you are targeting for the next few years considering CAPEX is on the rising mode?</p>
<h3 class="underline_top">Q&A Session (Continued):</h3>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>We are not expecting any significant rise in debt equity even when the peak CAPEX is going to happen in FY '27-28 and FY '28-29. Our expected debt equity will be around 1 during those years, as cash outflows in terms of CAPEX investments will exceed cash inflows. But once the projects are commissioned, subsequent cash outflows will normalize. We are comfortable at a 0.4–0.5 level of debt equity. This year and next year, since our CAPEX is around Rs. 20,000–22,000 crores, we do not foresee a significant improvement in debt equity. We expect to maintain 0.1–0.2 levels.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>And the last one from my side, what was the Russian crude share during Q1? Sorry, I missed that part. Are we facing any issues on the financial payments related to Russian crude?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>No. At this point of time, since the prices are below the threshold price, there is no issue in terms of payment. Our crude procurement from Russia is around 34% during the 1st quarter. It has slightly reduced in the last month, but we expect flows to return to the normal 30%–35% range.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>So it is expected that it will remain in the range of 30%–35% for the remaining period of FY '26?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes, that is what we are expecting. As long as there are no new sanctions on Russian oil, our procurement strategy will remain around 30%–35% of Russian crude.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Thanks a lot, sir. This was really helpful.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Vivekanand from Ambit Capital. Please go ahead.</p>
<h3 class="underline_top">Vivekanand:</h3>
<p>Yes, hi. Thank you very much for the opportunity. I have two questions. First, regarding the impairment of Rs. 1,773 crores, which has brought down your carrying value in BPRL to around Rs. 4,500 crores. Is that correct, or was there any other subsidiary or joint venture where there was an impairment? Second, on your gas SBU—some other players in the gas space are consolidating their gas assets. Your gas vertical includes the erstwhile BGRL, now part of BPCL as an SBU, and shareholding in several large CGD entities, some of which are also investing. I want to understand, given the focus on gas, what steps are you taking to provide comfort to investors on value creation, especially since gas valuations are currently higher than oil? Are there any plans to look at the gas vertical differently than the current structure?</p>
<h3 class="underline_top">Q&A Session (Continued):</h3>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes, rightly, our focus in gas is significantly higher compared to other fuels. We have a strong capital allocation for gas. Our first strategy is to complete the minimum work program: completing CNG stations, PNG connections, and creating the required pipeline infrastructure. In terms of certain JV investments, some companies are listed, and a few have reached a stage where we can consider listing of those JV companies. For example, MNGL has received in-principle approval for listing, and the proposal has been submitted to the Ministry and DIPAM. We are awaiting approval. Regarding consolidation, we are not at that stage yet. Once a scale is reached, consolidation of small JV companies may be considered. The exercise is ongoing but not concluded yet.</p>
<h3 class="underline_top">Balagirish J.:</h3>
<p>And one more question was on BPRL impairment.</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes, regarding BPRL impairment, the impairment recorded in March ’25 pertains only to this quarter. No further impairment has been made. The majority of the impairment relates to BPRL. Impairments in other JV company investments are very small, around Rs. 10–15 crores, mostly where certain JV companies are being liquidated. The main portion of the impairment is on account of BPRL.</p>
<h3 class="underline_top">Vivekanand:</h3>
<p>So the current state is that you are confident in the carrying value of around Rs. 6,000 crores, given the continuous delays in Mozambique?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Right. Every year we perform impairment testing. Based on circumstances and reporting date, any additional impairment is provided. As of March ’25, the impairment assessment validates this carrying value.</p>
<h3 class="underline_top">Vivekanand:</h3>
<p>Thank you very much and all the best.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of S Ramesh from Nirmal Bang Equities. Please go ahead.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>Thank you and good morning. Congratulations on your performance. I have two broad questions. First, in your consolidated accounts, the JV share of earnings has increased. What has driven this? Second, the segment results show a significant turnaround from loss to profit of Rs. 890 crores in the E&P business. What is the reason for this? Additionally, I have a few questions on the CNG business.</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>So this quarter, our group has contributed an incremental profit after tax of around Rs. 800 crores. Mainly, Bharat Petro Resources contributed around Rs. 450 crores. The profit generation in BPRL is largely due to currency fluctuations. The ruble has appreciated significantly against the rupee this quarter. Some of our funds are parked in rubles, as we could not repatriate dividends to India due to taxation and regulatory controls. This ruble appreciation has positively impacted BPRL's profits. Other JV companies have also performed well.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>On the CNG business, for the standalone numbers, can you provide the number of CNG stations operating in the standalone GAs? Also, what were the volumes of CNG sales for 4th quarter FY '25 and 1st quarter FY '26?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>We have a total of 2,464 CNG stations in our network. The total volumes were 339 TMT from our own GAs plus 269 TMT through our retail outlets, totaling around 600 TMT from both sources.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>Can you provide the corresponding number for standalone GAs in the 4th quarter FY '25, to understand the progress?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>We will share that separately.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>It appears there is some traction in EBITDA. Can we assume that on this run rate, the standalone numbers are showing profits?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Could you please repeat?</p>
<h3 class="underline_top">Management:</h3>
<p>EBITDA contribution from the CNG GAs.</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>EBITDA generation is in line with expectations. Once our infrastructure investments are completed, we expect full volumes. Currently, we are achieving around 120–130 TMT sales per year through our CNG network. Once the remaining CNG stations are commissioned, volumes and EBITDA will improve. Margins are as expected.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>Regarding depreciation, you have increased about Rs. 200 crores this quarter. What is the total capitalized assets for the CNG standalone GAs?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>As of now, total investment in the entire gas business is around Rs. 7,900 crore.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>Thank you very much and wish you all the best.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Hardik Solanki from ICICI Securities. Please go ahead.</p>
<h3 class="underline_top">Hardik Solanki:</h3>
<p>Thanks for the opportunity. Sir, just want to know, as you said, we have processed 34% of Russian crude. Still, if I look at the high sulphur percentage of total crude, it has gone down by 200 basis points. Can you explain what has caused the drop in high sulphur crude processing?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>There is no specific reason. Based on product demand, we may take slightly lower sulphur grades. WTI grades are slightly higher on the consumption side. So the high sulphur consumption declined by 1% quarter-on-quarter—from 77% last quarter to 76% this quarter. Small changes like this are normal.</p>
<h3 class="underline_top">Hardik Solanki:</h3>
<p>That is helpful. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Siddhesh Jain from Axis Capital. Please go ahead.</p>
<h3 class="underline_top">Siddhesh Jain:</h3>
<p>Thank you, sir. I wanted to know how the unit economics work at the EV charging stations and the expected EBITDA contribution in FY '27?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>The financial contribution is currently very insignificant. Total investment is around Rs. 250–300 crores, aided by government subsidies. EBITDA contribution from EV charging stations is expected to be modest, around Rs. 10–15 crore. The main objective is to provide convenience to customers at our retail outlets.</p>
<h3 class="underline_top">Siddhesh Jain:</h3>
<p>And on the unit economics, how does it look?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Unit economics today are limited because we are at only 2% capacity utilization. Currently, there is no meaningful profit. Full benefits will accrue over the next 2–3 years as infrastructure is completed and EV adoption increases.</p>
<h3 class="underline_top">Siddhesh Jain:</h3>
<p>Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Vikas Jain from CLSA. Please go ahead.</p>
<h3 class="underline_top">Vikas Jain:</h3>
<p>Hi, sir. Thanks for taking my questions. Firstly, your debt number is clearly a great surprise. This is the lowest debt number we have seen in at least 15 years or more. I wanted to understand this Rs. 13,000 crore decline. Part of it may be due to end-of-year excise duty and other linked payments that you make in advance. But where is the rest coming from? Is it cash profit, a release from working capital, or something temporary?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Comparing March ‘25 to June ‘25, there are two major factors. One is excise duty—end-of-year payments in March are around Rs. 7,000–8,000 crore, whereas during the year, payment windows are longer. Secondly, due to lower inventory prices, even with similar volumes, the inventory value has declined by around Rs. 3,000 crore. So, a release of working capital accounts for the rest. Other current and financial liabilities remain largely unchanged. Once the LPG subsidy is received in the next 1–2 months, it will further improve cash flow. We do not expect any major changes in debt-equity as long as crude remains around $65–70.</p>
<h3 class="underline_top">Vikas Jain:</h3>
<p>Regarding the Rs. 30,000 crore compensation you would receive, what is the estimate for FY '25-26?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>We expect it during FY 25-26. The exact number will depend on communication from the Ministry. Based on market share, for BPCL it should be around Rs. 7,500–8,000 crore.</p>
<h3 class="underline_top">Vikas Jain:</h3>
<p>Understood. One more thing—other income is uncharacteristically high in Q1. Anything specific here?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Mainly surplus funds. We invested in one-year fixed deposits at 7.5–7.8%. That is the reason for higher interest income. There is no one-off item. Small forex gains are negligible and mostly relate to crude payments, not borrowings.</p>
<h3 class="underline_top">Vikas Jain:</h3>
<p>Understood. So for CAPEX, FY '26 is Rs. 20,000 crore, FY '27 slightly higher, but FY '28 would be the peak?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes. Based on current approved projects, we expect FY '28 around Rs. 34,000 crore, and FY '28-29 around Rs. 35,000 crore. FY '26-27 is estimated at Rs. 20,000–25,000 crore. These numbers may vary if new projects are approved, but the current estimates are as mentioned.</p>
<h3 class="underline_top">Vikas Jain:</h3>
<p>Thank you, sir. That was all from my side.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from Mayank Maheshwari from Morgan Stanley. Please go ahead.</p>
<h3 class="underline_top">Mayank Maheshwari:</h3>
<p>Thank you, sir. A few questions from a marketing perspective: Firstly, retail diesel—how has your market share trended? Secondly, on the industrial side, there is competition; can you give a sense of what is happening? Finally, how do the recent regulatory changes on ATF pipelines impact your jet fuel market share?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>For HSD retail, our market share this quarter is 29.59%, slightly lower than the previous quarter. In the direct segment, we face competition from private players who are offering discounts, but we are not participating in the discounting. This is temporary, and we expect our direct business market share to recover. For aviation fuel, our market share this quarter is 26.51%, up from 21.78% last quarter, as we have reclaimed volumes from other customers.</p>
<p>Regarding ATF pipelines, we do not expect a significant impact. Captive pipelines should remain tied to refineries, and we will monitor any policy changes. We are not anticipating any major change in competition due to this.</p>
<h3 class="underline_top">Mayank Maheshwari:</h3>
<p>Got it. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from Kishan Mundra from DAM Capital. Please go ahead.</p>
<h3 class="underline_top">Kishan Mundra:</h3>
<p>Hi, sir. Just one question from my end. Whenever geopolitical tensions settle down and daily fuel price revisions on petrol and diesel resume, what would the normalized margins look like on petrol and diesel?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Currently, I cannot specify when daily pricing will resume. Margins depend entirely on crude prices. As long as crude is in the $65–70 range, our margins remain healthy. If crude rises above $70–75, some pressure may occur, but there is no standardized margin at present because we are not in daily pricing mode.</p>
<h3 class="underline_top">Kishan Mundra:</h3>
<p>Theoretically, in 3–6 months, if crude is at $60 and daily pricing is implemented, what could margins be? Rs. 4–6 per litre?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Even with large CAPEX programs ongoing, a standard margin of around Rs. 2.5–3 per litre is comfortable for us.</p>
<h3 class="underline_top">Kishan Mundra:</h3>
<p>This Rs. 2.5–3, is it after deducting freight and transportation?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes, this is net retention after all expenses.</p>
<h3 class="underline_top">Kishan Mundra:</h3>
<p>Understood. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from Somaiah V from Avendus Spark. Please go ahead.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Thanks for the opportunity, sir. My first question is on LPG under-recovery. When we book LPG under-recovery, does this include the normal marketing margins? For example, if the under-recovery is Rs. 100 per cylinder, does this include the normal margins or is Rs. 100 purely the break-even requirement?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>No, under-recovery is calculated beyond our normal margins. Margins are separate. Whatever money is reimbursed for under-recovery is over and above the margin.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>So if we get a Rs. 100 compensation, it brings us back to normal margin levels?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Correct. The under-recovery includes the margin.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Understood. The second question is on CAPEX. Could you provide a segment-wise break-up for Rs. 20,000 crores this year and Rs. 20,000–25,000 crores next year? Also, an update on the Bina project?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>For FY 2025-26, of the Rs. 20,000 crores:<br />
- Refinery and Petrochemical projects: ~Rs. 6,500 crores<br />
- Marketing side including pipelines: ~Rs. 1,400 crores<br />
- RO expansions including CNG network: ~Rs. 4,000 crores<br />
- CGD: ~Rs. 1,385 crores<br />
- BPRL equity: ~Rs. 2,500 crores<br />
- LPG including cylinders and marketing infrastructure: ~Rs. 2,000 crores<br />
This provides a broad break-up for FY 2025-26.<br />
For FY 2026-27, the approximate allocation will be:<br />
- Refinery and Petrochemicals: ~Rs. 11,000 crores<br />
- BPRL equity: ~Rs. 2,500 crores<br />
- CGD: ~Rs. 2,200 crores<br />
- Marketing initiatives including RO expansions and related infrastructure: ~Rs. 6,000 crores<br />
Overall, FY 2026-27 is expected to be in the Rs. 22,000–25,000 crore range.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Helpful, sir. The Rs. 6,500 crores for refinery and petrochemicals—will this predominantly be for Bina? Also, what is Bina’s progress in terms of completion and cumulative CAPEX spent so far?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes, Bina has achieved 14.2% physical progress. For CAPEX, by the end of this year, we plan to spend ~Rs. 4,600 crores cumulatively for Bina. For the Kochi Polypropylene project, ~Rs. 600 crores is expected to be spent by year-end.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>In the opening remarks, you mentioned an upgradation CAPEX at Mumbai Refinery. Could you share timelines and details?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes, the Board approved this project this quarter. It involves replacement of the existing FCC and CCU units with upgraded Petro RFCCU units, including residue upgradation. Total gross capital outlay is ~Rs. 14,200 crores. Mechanical completion is expected by May 2029.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>When will work start?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Work has already started. We are appointing the PMC and finalizing license selection. Initial work is underway.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Got it, sir. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Achal Shah from Ambit Capital. Please go ahead.</p>
<h3 class="underline_top">Achal Shah:</h3>
<p>Sir, am I audible?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes.</p>
<h3 class="underline_top">Achal Shah:</h3>
<p>Sir, I wanted to understand a bit about the lubricant business. Can you give a sense of lubricant volumes, EBITDA, EBITDA margin, and market share for FY '25? Also, what has been the volume uptake after the 2023 promotional scheme?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>We cannot share EBITDA numbers for individual products, but volume-wise, for April to June, we sold 78.7 TMT of lubricants. Last year, it was 83.4 TMT, so there is a slight degrowth of ~6%. This was primarily due to technical issues at our lube oil blending plant, which affected production. So for this quarter, lubricant volumes stand at 78.7 TMT.</p>
<h3 class="underline_top">Achal Shah:</h3>
<p>Sir, would it be possible to share the FY '24 and FY '25 volumes at least?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Yes, we will share that information.</p>
<h3 class="underline_top">Achal Shah:</h3>
<p>Sir, on throughput per outlet, you mentioned BPCL is the best among PSUs but lags private retailers. Is this due to the higher outlet count of OMCs compared to private players, or is there another reason? Does highway presence play a role?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Private players are achieving higher volumes per RO mainly because they offer higher discounts to customers, which we have largely avoided. Their network is also concentrated in certain high-volume areas, unlike ours, which spans rural, highway, and ABCD markets across India. Hence, per RO volume comparison with private players is not meaningful. Within the PSU category, BPCL remains the leader.</p>
<h3 class="underline_top">Achal Shah:</h3>
<p>Understood. Sir, one last question: regarding OMC trade margins, what are the margins on a per kg or per scm basis when OMC outlets supply gas to CGD companies like IGL or MGL?</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>The retailer margin will be around Rs. 2 per kg when we sell CGD through their GAs. If BPCL is retailing in its own forecourt, then BPCL earns that margin.</p>
<h3 class="underline_top">Achal Shah:</h3>
<p>Understood. Thanks, sir.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. The next question is from the line of Sucrit Patil from EyeSight Fintrade Private Limited. Please go ahead.</p>
<h3 class="underline_top">Sucrit Patil:</h3>
<p>Good afternoon to the Bharat Petroleum team. I have a specific question for Mr. Pankaj Kumar. Sir, are you online?</p>
<h3 class="underline_top">Pankaj Kumar:</h3>
<p>Yes, sir. I am online.</p>
<h3 class="underline_top">Sucrit Patil:</h3>
<p>Good afternoon, sir. My name is Sucrit Patil. I wanted to ask a forward-looking question regarding capital allocation. As BPCL expands its footprint in EV charging, biofuels, and green hydrogen, how is corporate finance evolving its capital deployment philosophy to support these new verticals? Also, is there a shift towards platform-based valuation models or JVs/partnerships that could unlock non-linear returns beyond the traditional refinery and marketing metrics?</p>
<h3 class="underline_top">Pankaj Kumar:</h3>
<p>Thank you for the question. The broad CAPEX roadmap has already been shared, with major projects announced totaling around Rs. 1.5 lakh crore. Our existing operations are generating strong cash flows, providing a solid base for funding these initiatives. Debt-equity remains very comfortable. Refinery projects on our balance sheet are planned with a debt-equity ratio up to 1:1, which we are comfortable with. Simultaneously, several projects will be executed through joint ventures, particularly in new business areas like renewables. For example, of the 26 CBG plants planned, 10 will be direct investments, and 16 will be through JVs. For balance-sheet projects, we have considerable leverage available and can sustain phased CAPEX deployment. For JVs, our proportionate capital allocation is modest, as partners contribute equity. In renewable projects, we also plan to use higher debt-equity ratios to optimize funding while maintaining financial discipline. And we are targeting good IRR for all these projects in the range of 12%-15%. So therefore, we expect this to be quite comfortably funded from a capital allocation perspective.</p>
<h3 class="underline_top">Sucrit Patil:</h3>
<p>Great, sir. Thank you very much for the guidance. I wish you the best of luck and look forward to hearing you on the next Q2 concall. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you. Ladies and gentlemen, we will take this as the last question for today. I would now like to hand the conference over to Mr. Varatharajan for closing comments.</p>
<h3 class="underline_top">Varatharajan:</h3>
<p>Yes, sir. If you have any closing comments, please go ahead, Mr. Gupta.</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>We hope we have addressed all the questions. If anything remains pending, our team will share the information separately.</p>
<h3 class="underline_top">Varatharajan:</h3>
<p>Great, sir. I wish to thank all the participants and the management of BPCL for patiently answering all the questions. Thank you, everyone, and have a nice day.</p>
<h3 class="underline_top">V. R. K. Gupta:</h3>
<p>Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you very much. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.</p>
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Click Here To Listen Q1 FY26
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Conference Call Recording
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Q4 FY25
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Read Transcript
<h3>Moderator:</h3>
<p>Ladies and gentlemen, good day, and welcome to the Bharat Petroleum Corporation Limited Q4 FY '25 Earnings Conference Call, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star, then zero on your touch-tone phone. Please note that this conference is being recorded.</p>
<p>I now hand the conference over to Mr. Varatharajan Sivasankara from Antique Stock Broking Limited.</p>
<h3 class="underline_top">Varatharajan Sivasankara:</h3>
<p>Thank you, Sejal. A very good morning to all the participants and the management. I would like to extend a very warm welcome to all the participants for taking time out to be on this call and the management for taking the time out to present us the scenario for Q4. We have with us Mr. V.R.K. Gupta, Director Finance; Mr. Pankaj Kumar, ED Corporate Finance; Mrs. Srividya V, ED Corporate Treasury; Ms. Chanda Negi, GM, Pricing and Insurance; and Mr. Rahul Agrawal, Chief Manager, Pricing and Insurance.</p>
<p>I want to hand over the floor to Rahul Agrawal for his statutory announcement followed by the initial remarks from the management. Rahul, please.</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>Thank you, sir. Good morning. On behalf of the BPCL team, I welcome you all to this post Q4 earnings call. Before we begin, I would like to mention that some of the statements that we would be making during this con-call are based on our assessments of the matter, and we believe that these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results.</p>
<p>Since this is a quarterly results review, please restrict your questions to Q4 results. I now request our Director Finance, Mr. V.R.K. Gupta, who is leading the BPCL team for this con-call to make his opening remarks. Thank you, and over to you, sir.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Thank you, Rahul. Good morning, everyone. Welcome to the post quarter 4 results con-call. Thank you for joining us today. I hope you were able to go through our results for the quarter.</p>
<p><strong>Macro Overview:</strong></p>
<p>IMF has revised global growth projections downward to 2.8% for 2025 from an earlier projection of 3.3% and 3% for 2026, citing rising geopolitical tensions, trade disruptions, and associated spill-over effects, particularly in the context of intensifying US-China dynamics.</p>
<p>Despite global headwinds, India is expected to remain the fastest-growing major economy with projected GDP growth of 6.2% in FY '25-'26 and 6.3% in FY '26-'27, reflecting continued resilience and domestic demand momentum. India's GDP growth is expected to range-bound between 6.1% to 6.5% in FY '25-26 as per different agencies' forecast. In FY '24-'25, India's inflation rate moderated to 4.6% with global oil prices easing, and the RBI has also lowered its inflation projection for FY '25-'26 to 4% from an earlier estimate of 4.2%.</p>
<p>The INR-USD exchange rate fluctuated between 85.58 and 87.59 during Q4, averaging around 86.62. In April 2025, it averaged 85.57 aided by a weaker US dollar, China's currency devaluation, new tariff announcements, and sustained FII inflows. In terms of crude, the IEA forecast a supply surplus of 840,000 bpd in 2025 and 2026.</p>
<p>Meanwhile, global oil demand growth forecast for 2025 has been revised downward by 0.1 to 0.4 mbpd by major agencies, including the EIA, IEA, and OPEC, largely due to economic uncertainty from rising trade tensions. Brent crude witnessed the sharpest 7-day swing in April 2025, triggered by fresh US tariff announcements and an unexpected OPEC+ production hike.</p>
<p>Prices are expected to remain volatile with Brent likely in the range of $68 per barrel for 2025. The EIA projects India to increase its liquid fuel consumption by 0.3 mbpd in both 2025 and 2026, up from 0.2 mbpd in 2024, underscoring India's leading contribution to global oil demand growth, primarily driven by rising transport fuel consumption. Domestic petroleum products demand grew by 4.3% in Q4 with petrol up by 5.9%, diesel up by 1.2%, and ATF up by 6.5%.</p>
<p><strong>Operations Overview:</strong></p>
<p>Our refineries processed 10.58 million metric tons of crude, achieving 121% of nameplate capacity and recorded the highest ever annual throughput of 40.51 million metric tons. The distillate yield stood at 83.59% and product cracks for gasoline in Singapore moderated to $6.02 per barrel from $6.44 in the earlier period and for gas oil, $14.26 per barrel from $15.05. Accordingly, our refineries recorded a GRM of $9.2 per barrel in the current quarter, at a premium to Singapore GRM of $3.16 per barrel.</p>
<p>On the marketing side, our domestic market sales grew by 1.82% year-on-year during Q4 to 13.42 million metric tons with record annual sales of 52.4 million metric tons. We achieved the highest ever sales for lubricants of 472 TMT including sales from our retail outlets during the year.</p>
<p>Under Gas business, we achieved a total sales volume of 2.2 MMT, up 13.9% year-on-year during the year for CNG, PNG, and bulk sales. We also commissioned 2 LNG stations at company-owned and company-controlled retail outlets in BP Avinashi, Coimbatore, generating a sale of 71 metric tons.</p>
<p>We continued to lead our peers in retail outlet throughput averaging 146 KL per month compared to the PSU average of 130 KL per month, enabled by strategic market access and robust highway presence.</p>
<p>In April 2025, domestic LPG prices were increased by INR 50 per cylinder. This resulted in a decrease in under-recoveries on domestic LPG. The current under-recovery per cylinder is estimated around INR 170 per cylinder. The total negative buffer as on 31st March 2025 was INR 10,446 crores.</p>
<p>We commissioned 1,805 new retail outlets during FY '24-'25, expanding our network to 23,642 outlets. During the year, 5,546 outlets were solarized, bringing our total solarized ROs to 12,000. We are aggressively expanding our CNG fuelling infrastructure with mechanical completion of 340 new CNG stations during FY '24-'25, taking the total CNG network to 2,370. We added 3,313 EV charging stations during FY '24-'25, taking the total EV network to 6,563 numbers.</p>
<p>We commissioned the Dimapur depot in Nagaland. This is our first POL depot in the Northeast, enhancing supply network connectivity in the region. In line with the government's aim to achieve energy security of the country with a target of reducing import dependence by adopting biofuels as one of the measures, we have achieved the highest ever 19.35% ethanol blending during Q4 '24-'25.</p>
<p>We are expanding our foray into non-fuel services at our retail outlets through our in-house state-of-the-art cafe brand, BeCafe, where customers can experience gourmet coffee and snacks. As the propensity of EV charging gathers momentum, BeCafe would offer customers an upgraded convenience during their wait time. We have commissioned 105 BeCafe during FY '24-'25, taking the total BeCafe network to 111.</p>
<p><strong>Updates on New Projects:</strong></p>
<p>Bina Petrochemical and Refinery Expansion Project has made steady progress, achieving an overall progress of 11% against a scheduled target of 10.9%. All technology licensors and consultants have been onboarded and process packages for all units have been received. Detailed engineering activities are in progress. Key tenders have been floated and site enabling works are nearing completion.</p>
<p>During the last quarter, the Board has approved INR 6,100 crores towards pre-project activities, including land identification, feasibility studies, and environmental assessment for a greenfield refinery cum petrochemical complex in Andhra Pradesh. Land procurement is in process.</p>
<p>In continuance of the Board approval in the previous quarter, BPCL and Sembcorp Green Hydrogen India Private Limited, a wholly owned subsidiary of Sembcorp Industries, have entered into a joint venture agreement to jointly pursue opportunities in renewable energy and green hydrogen and its derivatives projects across India. The strategic partnership aims to support India's energy transition and developmental goals.</p>
<p>Further, BPCL and GPS Renewable Private Limited have entered into a joint venture agreement to establish compressed biogas (CBG) plants across India. The joint venture will focus on converting organic biomass waste into compressed biogas by leveraging advanced waste-to-energy technologies.</p>
<p>The joint venture plans to establish 8 to 10 plants across Bihar, Orissa, Punjab, Uttar Pradesh, and West Bengal over the next few years. These regions offer significant agri-biomass potential for CBG production and are aligned with BPCL's existing geographical locations of city gas distribution.</p>
<p>In a positive development for the BPCL Mozambique project, US EXIM, with the largest project financing commitment of $4.7 billion, approved the decision to continue its participation in the project. The operator has informed that the onshore main contractor, CCSJV, has issued full notice to proceed effective 18th April 2025 to three key subcontractors to commence the full scope of work. This action is intended to facilitate a full restart and resolution of force majeure not later than July 2025.</p>
<p>Without further ado, let me guide you through the financial highlights for the quarter. The revenue from operations stood at INR 1,26,865 crores. The profit after tax stood at INR 3,214 crores. Against an estimated capex of INR 16,400 crores for the financial year FY 2025, we have spent about INR 16,967 crores during this year. The capital expenditure expected for FY '26 is about INR 20,000 crores.</p>
<p>Our stand-alone net worth as of 31st March 2025 is INR 80,960 crores. The earnings per share for the quarter is INR 7.52 and for the full year is INR 31.07.</p>
<p>As of March '25, the debt-to-equity at stand-alone gross borrowing level is at 0.29. Overall stand-alone gross borrowings are INR 23,278 crores. We have current investments, including oil bonds, of about INR 12,490 crores. So, the debt-to-equity net of current investments at stand-alone level is 0.13. At the group level, the gross debt-to-equity is at 0.63 and net of investments, it is at 0.45.</p>
<p>In order to reward our shareholders for their continued support, the company has dered a final dividend of INR 5 per share in addition to the interim dividend of INR 5 per share.</p>
<p>This concludes my comments, and I will be happy to take your questions now. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The first question is from the line of Probal Sen from ICICI Securities.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Firstly, on the refining performance. I just wanted to understand the components of this $3-plus premium that we have done. Is it fair to assume that there is some inventory gain that was there in the quarter? And the second part of this question is, can you tell us what kind of Russian crude percentage was there even in the fourth quarter in terms of overall crude sourcing?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. From the refining side, we don't generally calculate inventory gains separately because our average inventory is less than one month. Generally, in the same month we procure, and our throughput is completed within that month. However, the impact is mainly on account of Russian crude and better refining margins. For Q4, we processed 24% Russian crude out of the total throughput. The availability of Russian cargo was restricted due to the new sanctions. However, we are positive about getting sufficient cargoes in the current quarter.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>So that number has basically gone up in Q1? Right?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, right, right.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Sir, the second question was about the expansion projects. In terms of the thought process behind setting up yet another greenfield refinery, can we get a little sense of what the configuration could look like? What kind of crude sources will be there for the refinery and what sort of timelines are we looking at for commissioning the Andhra Pradesh greenfield project?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Let me rify: this Andhra Pradesh project is a refinery-cum-petrochemical project, not only a greenfield refinery. It will have large petrochemical intensity. We are working on two configurations: either a 9 MMT train or a 12 MMT train. Detailed feasibility reports (DFR) are ongoing. With 40% petrochemical intensity, we are broadly planning 4–4.5 MMT of refinery products and around 3.4–3.8 MMT of petrochemicals for the 9 MMT train. Parallelly, we are also evaluating the 12 MMT train. Based on the final feasibility reports, we will take a call on 9 MMT versus 12 MMT. Work is still ongoing.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>And one last question… Timelines?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, the timelines we are working with are 48 months from the date of FID.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>48 months from FID as and when it will be done?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>FID is expected by the end of '25, maybe in November or December.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Okay. One last question, if I may, sir. With respect to Mozambique, thank you for sharing that there is progress and forward movement, but we have also taken an INR 17 billion impairment. Can we understand which projects this impairment relates to in this quarter?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Every year, we do impairment testing against our investments. Generally, if there is any project delay expected, it can result in impairment. In fact, we were expecting the removal of force majeure last year, but due to various reasons, the operator could not lift it. As a result, there is slight impairment in the cash flows and valuation, mainly for Mozambique, and a small portion from Brazil as well. This has resulted in the impairment.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>So now, sir, we are expecting the force majeure to be lifted sometime in this calendar year. There's a decent probability?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>That is what even in the recent announcement by TotalEnergy's CEO indicated—they are expecting work to resume around June–July. All contractors are onboarded, project financing continuation has been agreed upon, and there are no hurdles now. The local situation has also improved significantly, so work can restart at any time.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Sabri Hazarika from Emkay Global Financial Services.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Congratulations on a good set of numbers. Just a bit more on the refining margin side. I understand you have less than one month of inventories. But is this the same across all the refineries, or is it higher for Bina? Bina reported a GRM close to $15. Looking at the various cracks, sequentially, it has come down only. OSPs have also expanded, and Russian crude discounts have fallen to 24%, as you mentioned. So, is the impact the same across all three refineries, or could there be some inventory-related factor, especially for Bina?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, the three refinery configurations are totally different. For example, Bina can take more high-sulfur and Russian crude, whereas Mumbai refinery cannot take more than 15% Russian crude. This depends on the refinery configuration, which is why Bina’s GRMs are generally higher.</p>
<p>Second, yields matter. Bina’s diesel yield is higher in percentage terms compared to other refineries, which contributes to higher GRMs. Being an inland refinery, Bina also benefits from the RTP structure, resulting in slightly higher realizations compared to Mumbai refinery.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Right, sir. In terms of refining margin guidance, if we consider these Q4 yields to sustain over the next year, are we looking at a $9 GRM, or do you see another range? Any guidance based on current cracks?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>It depends on several factors, mainly crude prices and spreads. Even if spreads continue at current levels, one can safely assume GRMs in the $7–$9 range. If Russian crude is available at around 34% with a discount of $3–$4, which are the basic parameters, refining margins should remain strong.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Right. And $3–$4 is the current Russian discount?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, around $3, roughly $2.8–$3.1. It varies month to month, but in recent months it has been about $3.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Right. And in this context, how has the light, heavy, sweet, sour mix become more favorable, especially with OPEC raising production? What is the impact on Kochi refinery in particular?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Kochi refinery, no—but definitely, increasing OPEC production will have a positive impact on Mumbai refinery. Kochi primarily processes more Russian crude only.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Okay. So, in Mumbai refinery, we'll see some benefit from increasing OPEC production.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, yes, right, right.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Right. Just one small question on the marketing side. You mentioned INR 170 is the current LPG under-recovery, and LPG prices have been quite sticky—they haven't fallen as much as crude. How do you see the overall cash flow scenario, given that your capex target is INR 20,000 crores? Considering the exceptional margins in petrol and diesel, are we at a comfortable level, or do you expect debt to go up?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, even for FY '24-'25, after absorbing LPG under-recoveries, our gross cash inflow is around INR 22,000 crores. We have distributed INR 4,000 crores as dividends, leaving INR 18,000 crores in cash flow, while our capex was almost INR 17,000 crores. For next year, with capex around INR 20,000 crores, we are hopeful there won’t be significant pressure on incremental borrowings—maybe INR 1,000–2,000 crores here and there. We also expect some mechanism for LPG recoveries this year.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Right. So you are expecting some recovery in LPG, correct?</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of S. Ramesh from Nirmal Bang Equities.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Congratulations on your results. Going back to the gross refining margins, sequentially, GRMs have improved across all three refineries. Is this mainly due to yields, or are there benefits from secondary processing units or the crude slate? What explains the Q4 margin increase compared to Q3 of FY '25?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>There are a couple of factors. First, in Q4, our refinery throughput reached almost 10.5 million metric tons—the highest ever. Plant reliability was much better compared to Q3, with no shutdowns or major reliability issues. Throughput was significantly higher than any previous quarter.</p>
<p>Second, even though yields were slightly lower, favorable spreads and good diesel output across the product portfolio contributed to higher GRMs. Additionally, Russian crude discounts also positively impacted GRMs.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Okay. Looking ahead to FY '26, based on current retail spreads and refining margins, are there other levers to grow EBITDA and profitability, particularly from industrial products beyond petrol and diesel?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, for FY '25-'26, everything depends on crude prices and their movement. In the short term, over 3 to 6 months, we expect crude to hover around current levels—maybe INR 65–70 or INR 60–65. As long as crude remains in this range, it will be helpful for margins for the OMCs.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Okay. On the CGD business, can you give some sense of the assets capitalized and how you see the P&L for the CGD business moving on your standalone GAs over the next 1–2 years?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>The total expected capex for all 26 GAs together is INR 47,000 crores, spread over 8 years. Till date, we have already spent around INR 7,600 crores. For FY '25-'26, approximately INR 2,000 crores is planned for CGD capex. Volume growth in CGD is very strong—for example, CNG sales grew 81% in FY '24-'25.</p>
<p>Our capex plan is proceeding as per the Minimum Work Program. We are achieving expansion in CNG and industrial customers. PNG connections are a bit behind schedule, but overall, we expect good volume growth and network expansion in CGD.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Mayank Maheshwari from Morgan Stanley.</p>
<h3 class="underline_top">Mayank Maheshwari:</h3>
<p>Two questions from my side. First, on fuel marketing: over the last year, there’s been some decline in retail fuel market share, especially for diesel, gasoline, and industrial products. How do you see your strategy for market share over the next few years, and where do you expect it to settle for transportation fuels?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. In the short term, we have lost some market share over the past couple of quarters. But over the last five years, our market share has been growing steadily. We do not compete on discounts; our focus is on providing quality service and expanding the network.</p>
<p>On highways, we are concentrating on network expansion and recently acquired almost 100 WSA sites (wayside amenities), which are large sites where we can provide enhanced customer services. We are confident that our market share will improve over time. As private players take advantage of high margins, our long-term strategy remains expanding our network, improving services, and implementing digital initiatives to gradually increase market share.</p>
<h3 class="underline_top">Mayank Maheshwari:</h3>
<p>And the second question was in terms of Kochi refinery on the petrochemical side. Can you give us details on how much EBITDA and earnings were made on the Kochi side for petrochemicals?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>For PDPP, production during FY '24-'25 was 251 TMT, almost 76% of capacity utilization. Last year, it was 233 TMT, so production increased by almost 10%. Gross production margins for petrochemicals were around INR 579 crores, which corresponds to approximately $0.55 per barrel. The PDPP petrochemicals unit contributed $0.55 per barrel to the refinery for the full year.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Sumeet Rohra from Smartsun Capital.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>Sir, it's been a commendable performance, especially given the LPG under recovery absorbed. As an investor, I have a question: In FY '24, the PAT was about INR 24,000–25,000 crores, and in this financial year, it's INR 13,000 crores after absorbing about INR 10,500 crores. Is it correct to assume that profitability, including LPG, has now reset to a new standard? Can we expect sustainable profits over the next few years?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Let me rify for FY '23-'24. The profits were high mainly due to spreads; GRM was around $14 per barrel that year. Russian discounts were around $8 per barrel and spreads were very high. That ecosystem is not expected to continue long-term. This year, spreads have moderated to the 10-year average, and Russian discounts have reduced to around $3 per barrel. If these parameters continue, refining margins will remain strong and profitability can be considered at a better sustainable level compared to earlier years.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>On LPG under recovery and compensation, when do you expect the government to provide some amount of compensation?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We are hopeful that some mechanism will be in place because after the INR 50 increase, the under-recovery has reduced. We are expecting around INR 650–700 crores per month for BPCL. We are hopeful that some reimbursement mechanism will be implemented, possibly on a quarterly basis, to cover the under-recovery.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>And sir, there is just one small point. When the Honourable Oil Minister had the press conference, he mentioned that LPG prices would be looked at on a monthly basis. Can we assume that we are moving toward a period where LPG prices might actually be controlled once they are market-aligned?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>There is no such communication at this point.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Somaiah from Avendus Spark Institutional Equities.</p>
<h3 class="underline_top">Somaiah:</h3>
<p>My first question is on Capex. Can you help us with the run rate? You said this year it is INR 20,000 crores. How do you see this moving over the next 2–3 years? Also, can you provide a broad split? For Bina, how much have we spent so far, and how much remains? For the greenfield project, when will the Capex start ramping up?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>This year, our target Capex is around INR 20,000 crores, of which approximately INR 17,200 crores is direct investment and around INR 2,700 crores is equity investment through our JVs. The current year run rate is expected to be around INR 20,000 crores. For FY '26-'27, Capex is expected to increase to INR 25,000 crores, and in the subsequent year, around INR 30,000 crores. Peak Capex for Bina refinery will happen in these subsequent years.</p>
<p>Broadly, major Capex allocations will be for CGD, Mozambique and Brazil expansions, and expansion & petrochemicals. This year, out of INR 20,000 crores, approximately INR 5,900 crores is allocated for refineries, INR 2,400 crores for pipelines, and INR 5,600 crores for marketing, including INR 2,500 crores for retail outlet expansion. This is the broad capital allocation for this year.</p>
<h3 class="underline_top">Somaiah:</h3>
<p>For the INR 20,000, 25,000, and 30,000 crores numbers, does this include the greenfield project, or will the greenfield Capex come later?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>The AP refinery project is not yet included. Once FID is approved by the Board, we will have a scheduled Capex plan. The current numbers exclude the AP refinery project.</p>
<h3 class="underline_top">Somaiah:</h3>
<p>Got it, sir. Also, on crude sourcing, you mentioned the Russian crude mix change Q-o-Q. Could you provide details on other crude sources, for example, Q3 versus Q4? Broadly, what were the mix changes?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>In Q3, Russian crude was 34%, and in Q4 it reduced to 24%. From Saudi, Q3 was 19% and Q4 increased slightly to 21%. Abu Dhabi went from 18% in Q3 to 16% in Q4. Iraq is around 10%, Oman increased from 1% in Q3 to 7% in Q4, and US WTI decreased from 13% in Q3 to 5% in Q4. These percentages vary quarter-on-quarter depending on commercial viability and availability of crude.</p>
<p>For example, if Russian crude discounts are better and more crude is available, we take more Russian crude. If WTI discounts are commercially feasible and provide more value to the refinery, we take those sources. These sources vary every quarter.</p>
<h3 class="underline_top">Somaiah:</h3>
<p>Sure, sir. The detailed breakup is very helpful. Just one small rification on the petrochemical margins: at the gross margin level, you mentioned INR 579 crores. At the EBITDA level, would it be positive?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, at the EBITDA level, it is definitely positive.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Vikash Jain from CLSA.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>Sir, I have two questions. Firstly, on Mozambique, now that the project seems to be coming back to life. Assuming the July timeline holds for work commencement, could you give a sense of how things are likely to progress in terms of timelines? How many trains are expected and by when? Do we need fresh contracts, or are the old MOUs still valid? Also, a broad estimate of cost escalation for the project?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Most of the project contracts are valid as of today. Every contractor has agreed, and the major contractor has issued notices to subcontractors to restart work at any time. On the sales side, all SPAs are valid. Some SPAs have been revised, but the operator has taken commitments for certain quantities, so there is no issue there either.</p>
<p>On project financing, the major lender, US EXIM Bank, initially committed $4.7 billion. In March, they agreed to continue project finance. So, all three aspects—contracts, SPAs, and financing—are intact and work can restart anytime.</p>
<p>Regarding project timelines, the operator is still committed to completing the project by July 2028, which was the original schedule. After restart, they may provide revised schedules if necessary.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>And likely Capex inflation, you would...</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>The initial project was approved at $15.4 billion. About a year ago, the operator indicated a revised cost of around $19.4 billion. That is the latest estimate.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>That's for how many trains? 10 million tons?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Two trains, 2 trains.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>9.6 million tons, right?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>13.1, split as 6.5 and 6.5 million tons each.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>Sorry, okay. 6.1 and 6.1, that's 12…?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>6.5 and 6.5, totaling 13.1 million tons.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>13 million tons, okay. And sir, just on Russian crude — currently about 24%. With crude prices around $60, the Russian crude price is now below the price cap. How does that affect pricing? Does it allow it to be sold more freely with less insurance concerns? Does it impact the discount on Russian crude?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>If Russian crude is below the price cap, there will be more buyers. We expect the discount may reduce. Currently, the discount is around $3. However, new buyers are entering the market; for example, Turkey and Syria are buying more Russian crude. This slightly reduces availability for Indian buyers, which is why last quarter it was 24%. We expect to process around 30%–32% Russian crude in the coming months.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>And just one last point — we understand inventory gains are not calculated separately, but GRMs jumped from $5.6 to $9 this quarter despite Singapore margins not changing much. Is the current margin tracking similar levels?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Reasonably, the spreads remain good. Russian crude is available, and refining margins depend on the Russian discount. If discounts continue around $3–$3.5, margins will remain strong, especially since our Russian throughput is nearly 34%. Our yield is around 84% with higher diesel volume weightage. There may be minor impact from 1–2 old inventory cargoes in this quarter, but otherwise operations are normal.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next follow-up question is from the line of S Ramesh from Nirmal Bang Equities.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>In terms of the impact of the increase in excise duty, which has been absorbed by the industry, how would it impact your marketing inventory accounting? And secondly, regarding the CGD business, is it possible to give an idea of the delta in EBITDA over FY '26 and '27? Will it be meaningful, or more likely FY '28 in forward estimates?</p>
<h3 class="underline_top">V Srividya:</h3>
<p>This revision in excise duty happened post 31st March. Hence, it does not have any impact on the results as of 31st March. This is only a post-April event and therefore does not affect the reported results.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>No, I was asking more about the current quarter or for FY '26.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Since the sales price remains the same, any additional excise duty absorbed will reduce margins accordingly.</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>And on the CGD business?</p>
<h3 class="underline_top">V Srividya:</h3>
<p>Could you rify your question regarding the CGD business?</p>
<h3 class="underline_top">S Ramesh:</h3>
<p>We want to understand the delta in EBITDA for the stand-alone GAs in FY '26 and '27. When will it have a meaningful impact on results?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>As of now, EBITDA contribution from the gas business is not very significant since we are still in capex and expansion mode. Volumes are growing this year, but EBITDA contribution remains modest. Significant impact is expected only from FY '27–'28, once the full Minimum Work Program (MWP) is completed.</p>
<p>Currently, we have carried out around 2.3 million metric tons of gas business through our GAs, retail outlets, and bulk sales, which is not significant in terms of EBITDA contribution this year.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>After the write-off, what is the carrying value of the Mozambique project in our books? And what is the capex we will need to contribute after the project start? Could you also remind us of that?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>For Mozambique, the total investment made so far is $2.3 billion, roughly INR 19,000 crores. We will need to invest around another $2.1 billion over the next couple of years. Most of this investment comes through project financing. Thus, the total investment in Mozambique will be $4.1 billion. Our impairment is against our overall investments, which include Mozambique, Brazil, Russia, and UAE. The impairment is applied to the portfolio as a whole. Carrying values for individual investments will be shared separately.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>Sure, sir. Could you also update on the project status of the Brazilian project? When is the FDP likely to be approved, and what activities have taken place there?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>The tender has been floated, but it is not yet completed. The expectation is that the tender will be opened around June or July. After that, the FID is likely to be approved.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next follow-up question is from the line of Sabri Hazarika from Emkay Global Financial Services.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Two questions. Firstly, regarding Mozambique, you mentioned $2.1 billion as gross capex. There will be a debt component, right? Around 70%? So your equity contribution would be roughly 25–30%?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, that is correct.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Secondly, regarding LPG losses, Q3 to Q4 losses are not that significant, around INR 3,100–3,200 crores for both quarters, even though contract prices went up seasonally. Did the company take any steps to optimize LPG sales volumes or restrict losses?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, it follows a similar trend. Losses depend primarily on sales volumes. The formula remains the same.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>One of your peers reported much higher Q-o-Q LPG losses, around 20–25%. Why the difference?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>It depends mainly on volumes. I cannot comment on others’ volumes, but the pricing formula (CP-based) is standard across the industry. Sale price and landing cost methodology are the same for all companies.</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>For Sabri’s reference, the CP has been around INR 620–630 over the last six months.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>And there is no big window for LPG optimization. We are not doing any major optimization beyond the usual measures.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Got it. Given that oil has corrected to $60, we have seen LPG hold up quite strongly. Even the June contract prices are down only about $5. There have been reports that US tariffs and other factors are causing significant readjustments in LPG flows. What is your assessment regarding Arab Gulf LPG versus US LPG, and potential opportunities to reduce your own cost of purchasing LPG and thereby reduce under-recoveries?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Most of our LPG is under term contracts, primarily Arab Gulf-based. However, we are seeing some opportunity with US LPG. We estimate a potential $20–$30 per metric ton benefit if we can optimize by shifting certain cargoes from AG to US sources. We are exploring this and, wherever feasible, coordinating with suppliers to implement this optimization. This could provide a net benefit of about $20–$30 per ton, including freight and other costs.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>$20–$30 net benefit, including freight and other costs, correct?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, that is correct.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Varatharajan Sivasankara from Antique Stock Broking for closing comments.</p>
<h3 class="underline_top">Varatharajan Sivasankara:</h3>
<p>You mentioned 340 outlets added during the year. Could you rify the net number of your own CGDs and total CNG stations, including other GAs?</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>As of 31st March 2025, we have a total of 2,370 CNG stations. About 840 are in our own GAs, and approximately 1,530 are in retail outlets under other GAs.</p>
<h3 class="underline_top">Varatharajan Sivasankara:</h3>
<p>The 840 number corresponds to the 20 or so GAs that you operate, correct?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, that is correct.</p>
<h3 class="underline_top">Varatharajan Sivasankara:</h3>
<p>Fair enough. I would like to thank the management and all participants for taking the time to join today’s call. It is always a pleasure. Thank you, and have a nice day.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Thank you.</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>On behalf of Antique Stock Broking Limited, this concludes the conference. Thank you for joining, and you may now disconnect your lines.</p>
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Click Here To Listen Q4 FY25
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Conference Call Recording
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Q3 FY25
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Read Transcript
<h3>Moderator:</h3>
<p>Ladies and gentlemen, good day, and welcome to Bharat Petroleum Corporation Limited Q3 FY '25 Earnings Conference Call, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star, then zero on your touchtone phone.</p>
<p>I now hand the conference over to Mr. Varatharajan from Antique Stock Broking Limited. Thank you, and over to you, sir.</p>
<h3 class="underline_top">Varatharajan:</h3>
<p>Thank you, Steve. A very good morning to everyone. I would like to extend a very warm welcome to all the participants and the top management of BPCL. We have with us Mr. V.R.K. Gupta, Director Finance; Mr. Pankaj Kumar, ED, Corporate Finance; Mrs. Srividya, ED, Corporate Treasury; Ms. Chanda Negi, GM, Pricing and Insurance; and Mr. Rahul Agrawal, Chief Manager, Pricing and Insurance.</p>
<p>I'll now hand over the call to Mr. Rahul Agrawal for the initial disclosure and initial remarks. Rahul?</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>Thank you, sir. Good morning. On behalf of the BPCL team, I welcome you all to this post Q3 results con-call. Before we begin, I would like to mention that some of the statements we make during this con-call are based on our assessment of the matter, and we believe they are reasonable. However, their nature involves risks and uncertainties that may lead to different results. Since this is a quarterly results review, please restrict your questions to Q3 results.</p>
<p>I now request our Director of Finance, Mr. V.R.K Gupta, who is leading the BPCL team for this call, to make his opening remarks. Thank you, and over to you, sir.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Good morning, everyone. Wish you all a very Happy New Year. Welcome to the post quarter 3 results con-call. Thank you for joining us today. I hope you were able to go through our results for the quarter.</p>
<p>On the macro side, global economic growth is projected to stabilize at modest levels over the coming years. The World Bank forecasts flat growth of 2.7% for '24 to '26, while the IMF projects slightly higher growth of 3.3% for the same period. India remains the fastest-growing major economy among emerging markets and developing economies. The World Bank has retained its growth forecast for India at 6.7% for FY '25-'26, reaffirming its steady growth trajectory over the next 2 years.</p>
<p>The Indian rupee hit an all-time low of INR86.71 against the US dollar in January, raising concerns about inflationary pressures due to significant reliance on imports. It remains to be seen whether the RBI will opt for interest rate cuts to boost economic growth while addressing challenges of inflation and currency depreciation.</p>
<p>In terms of crude, the market is expected to remain adequately supplied this year. Global oil demand is projected to rise by about 1.2 to 1.3 million barrels per day, underpinned by expectations of rate cuts in the US and Europe and more stimulus from China. Oil supply is expected to increase by 2 to 2.1 million barrels per day. This anticipated supply is expected to keep prices in check in 2025.</p>
<p>The US Energy Information Administration projects Brent crude prices to average $74 per barrel in 2025. However, in the short term, the market is impacted by recent US sanctions and the Russian oil supply chain. The impact of US sanctions on Russian entities and the global supply chain remains to be assessed. Demand for petroleum products in India has continued to grow with an overall growth of 6.4% during Q3. Major products such as petrol, diesel, and ATF have grown by 9.6%, 4.8%, and 8.9%, respectively.</p>
<p>Performance in Q3 '24-'25:</p>
<p>On the operations side, our refineries achieved a throughput of 9.54 million metric tons per annum during the quarter, which is 107% of the nameplate capacity, despite shutdowns at Kochi and Mumbai refineries. Our distillate yield was 84.86% in this quarter, one of the highest among Indian refineries.</p>
<p>The product cracks for gasoline in Singapore fell slightly to $6.44 per barrel in Q3 from $6.83 in Q2, whereas the cracks for gasoil improved to $15.05 per barrel in Q3 from $13.69 in Q2. Accordingly, our refineries recorded a GRM of $5.6 per barrel during this quarter.</p>
<p>On the marketing side, our domestic market share grew by about 4% YoY during the quarter to 13.43 million metric tons. We continue to generate the highest throughput per retail outlet among our peers, with 154 KL per month versus 140 KL per month PSU average, driven by access to strategic markets and a strong network along highways.</p>
<p>We commissioned 1,082 new retail outlets in the 9-month period FY '25, taking our total network strength to 22,921 retail outlets. To increase penetration of CNG in the overall energy basket, BPCL is aggressively expanding its CNG fuelling infrastructure with mechanical completion of 183 CNG stations during April to December '24-'25, taking the total CNG network to 2,213.</p>
<p>We achieved the highest-ever 15.56% ethanol blending during this quarter. We commissioned 2 LNG stations at our company-owned and company-controlled retail outlets and identified another 10 locations on strategic highways for installing LNG facilities.</p>
<p>We are expanding our foray into non-fuel services at our ROs through our in-house state-of-the-art cafe brand, BeCafé, where customers can experience government coffee and snacks. As the propensity of EV charging gathers momentum, BeCafé offers customers upgraded convenience during their wait time. We have commissioned 44 BeCafés during 9 months '24-'25, taking the total BeCafé network to 50.</p>
<p>Updates on new projects:</p>
<p>The ethylene cracker project at Bina is a crucial initiative for BPCL, driven by growing demand for petrochemicals. The project is progressing as scheduled with technology licenses on board for all critical packages, detailed engineering completed for a few units, and others nearing completion. A significant milestone has been achieved with the successful completion of financial closure. BPCL secured a loan facility of INR 31,800 crores from a consortium of six banks, one of the largest single loan arrangements with a corporate entity in India, finalized on January 16, 2025.</p>
<p>The Board has approved INR 6,100 crores towards pre-project activities, including land identification, feasibility studies, and environmental assessment for a greenfield refinery-cum-petrochemical complex in Andhra Pradesh. During the previous quarter, BPCL Board approved entering into a JV agreement with Sembcorp Green Hydrogen India Private Limited in renewable energy and green hydrogen and a JV with GPS Renewables Private Limited for setting up compressed biogas plants across India. Necessary government approvals for these JVs have been received.</p>
<p>Board approval was also given for forming a JV with Praj Industries for setting up CBG plants. The company aims to set up 26 CBG plants across India in the near future. BPCL emerged as the lowest bidder in the NTPC tender for a 1,200-megawatt solar PV project to develop, generate, and supply 150 megawatts to NTPC. This project, with a capital investment of around INR 750 crores, will produce 400 million units of green energy. Additionally, BPCL secured 30 megawatts in NHPC solar PV project, tender concluded on January 21st.</p>
<p>Financial highlights for the quarter:</p>
<p>The revenue from operations stood at INR 1,27,521 crores. Profit after tax was INR 4,649 crores. Against an estimated capex of INR 16,400 crores for the financial year, we spent about INR 11,899 crores during April to December. Our stand-alone net worth as of 31st December is INR 80,305 crores. The earnings per share for this quarter are INR 10.88 per share.</p>
<p>As of December '24, our debt levels are low. Stand-alone gross borrowings are INR 19,600 crores with a debt-equity ratio of 0.24, and current investments including oil bonds are INR 16,098 crores. At the group level, the debt-equity ratio is 0.58 with gross borrowings of INR 46,500 crores. To reward shareholders, the company has declared an interim dividend of INR 5 per share.</p>
<p>This concludes my comments, and we will be happy to take your questions now. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Probal Sen from ICICI Securities.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>I have three questions. First, with respect to Russian crude as part of our sourcing portfolio, given the ongoing sanctions, what mitigation strategy do we have in place to secure supplies if Russian crude is disrupted? How much did it constitute as a percentage of our sourcing in the first nine months of FY '25? And assuming the discount on crude is no longer available, what would be the impact on crude cost?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Historically, we have been able to process around 34% to 35% of crude from Russia. In Q3 itself, the percentage of Russian crude processed came down to 31%. Following the recent US sanctions, supplies are reducing. We have finalized Russian cargoes for January and February, but for March, we are yet to conclude the supplies. Currently, we are not receiving sufficient cargoes for March.</p>
<p>From a risk mitigation perspective, crude availability is not an issue. The only impact is commercial: Russian crude typically offers around $3 per barrel benefit, which may not be available if Russian cargoes do not reach India. We foresee at least a 20% reduction in Russian cargoes for March, which we can source from the Middle East or WTI (for low-sulfur requirements) on a spot basis.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Understood, sir. So, is it fair to say that at 30% Russian crude with a $3 per barrel benefit, the impact on the overall crude cost would be around $0.90 per barrel on a blended basis if Russian crude is unavailable?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, if we are not receiving any Russian cargo, the impact could be around that level. However, we may still receive some cargoes. The reduction will not be absolute to zero immediately; it will take some time to rebalance the supply side.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Right. Secondly, regarding the capex projects—the Bina Petrochemical complex and the greenfield refinery in Andhra Pradesh—could you provide more granularity on the petrochemical slate at Bina? Specifically, the timeline, investment done to date, and the overall investment for the project?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>For Bina, the total approved gross capex is INR 49,000 crores. This is an integrated brownfield refinery project, with a refinery capacity expansion of 3 million metric tons and approximately 3 million metric tons of petrochemicals. The project is scheduled for completion by May 2028. As of now, around 7.5% of project milestones have been achieved.</p>
<p>In terms of financial progress, INR 1,000 crores have already been spent this year. Most technology licenses have been finalized, and the BDEP (basic design engineering packages) for most units have been completed. Some units are still pending. Work is progressing at speed, and we expect to meet the commissioning schedule in May 2028.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Sir, in terms of phasing, will the bulk of the capex happen starting FY '26 or '27?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>It will happen in FY '26-'27.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>So FY '27 is when we will see the bulk of the capex?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Right, right.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>And sir, in terms of the yield from the additional refining capacity, you mentioned 3 million tons of refining capacity and 3 million tons of petrochemical capacity. Is that correct?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, no. Out of the 3 million tons of additional refining capacity, intermediates will go into petrochemicals. Overall, the net refining capacity will increase by 3 million metric tons, from the current 7.8 million metric tons to 11 million metric tons. Most of the intermediates will be used for petrochemical production.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>So, from 7.8 million metric tons to a total complex capacity of 11 million metric tons, around 3 million metric tons would essentially be petrochemical output. Is that correct?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, it's not exactly like that. Out of the 11 million metric tons, only around 1.8 to 2 million metric tons will be intermediates, which will produce 3 million metric tons of petrochemicals.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Okay. One last housekeeping question. This quarter saw a sudden jump in staff costs. Could you explain? Previously, the quarterly run rate was INR 7–7.5 billion, but this quarter we saw over INR 1,200 crores in staff costs.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>This is a one-time impact. Certain performance-related dues pending for the last two years were settled in this quarter, which caused the spike. This is not repetitive in nature.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>And how much was that, sir? Around INR 400–500 crores to account for the difference?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>INR 370 crores.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Around INR 370 crores. Understood.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Funds.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>I wanted to understand the BPRL loan repayment due this year. We have around INR 8,300 crores repayment due. What is our plan? Are we planning to roll over this loan or pay it? How are we arranging the funds for BPRL?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Regarding BPRL, for the existing loans, we are mostly refinancing or rolling over because there is no significant cash generation from the BPRL venture. So, whatever loan repayments are due, we are repaying and refinancing. Most of the refinancing is at better terms, providing a benefit of around 10–15 basis points at the time of refinancing. But our plan is to rollover the loans since there isn’t sufficient cash flow generation at the BPRL venture.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>Sure. And in terms of the Mozambique assets, could you provide an outlook regarding the restart?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>For Mozambique, we are still waiting for the official announcement on the lifting of the force majeure. However, we are getting indications that this may happen soon, and once it is lifted, work will commence. The expected completion of this project is in FY '28–'29, and the first gas from the Mozambique fields is expected in FY '28–'29.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Vivekanand from Ambit Capital.</p>
<h3 class="underline_top">Vivekanand:</h3>
<p>Recently, we saw that you won a tender to supply renewable energy to NTPC. Could you explain the business model you are envisioning in renewable energy? Initially, it seemed focused on decarbonizing your own operations, but now it appears you are pursuing projects to supply externally as well. Also, could you clarify whether you will reach the 2-gigawatt target for renewable capacity by FY '26? Currently, it seems much lower.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. Our renewable strategy focuses on three main areas: first, achieving net zero for our internal operations; second, creating a separate revenue stream by supplying renewable power to utilities; and third, building renewable assets for our green hydrogen requirements and to cater to market demand for green hydrogen. Capital allocation will be directed across all three areas.</p>
<p>Specifically, this tender is for the utility business. We were the lowest bidder for around 150 megawatts in the NTPC tender, with an option for an additional 150 megawatts under a greenshoe option. Additionally, we recently won a 30-megawatt tender from NHPC. In total, we are creating around 300–350 megawatts of renewable assets primarily for the utility business.</p>
<h3 class="underline_top">Vivekanand:</h3>
<p>Okay. To clarify, the long-term targets for renewable capacity include all three areas combined, right?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Right. Our short-term target is 2 gigawatts, which we plan to achieve either directly or through JV companies. For this, we have already announced a 50:50 JV with Sembcorp India Private Limited, a Singapore entity, and have obtained all statutory approvals from the Ministry and the Government of India. Through this JV, we plan to create renewable assets wherever business opportunities arise. Within a couple of years, we aim to reach 2 gigawatts, and by 2030–35, our goal is to create at least 10 gigawatts of renewable assets.</p>
<h3 class="underline_top">Vivekanand:</h3>
<p>Okay. And would you be able to comment on the capex outlay for FY '26 and '27 for the renewable aspirations you have?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>For renewables, the overall capex for the next two years is around INR 10,000 crores. Specifically, for FY '25-'26, it will be approximately INR 3,000 crores, and for FY '26-'27, another INR 3,000 crores. Meanwhile, if we receive any new tenders, we can allocate additional capital accordingly.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Yogesh Patil from Dolat Capital.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Sir, our reported GRM of $5.6 per barrel was hardly $0.6 per barrel premium to the Singapore benchmark. So apart from the refinery shutdowns in Mumbai and Kochi, is there anything else that impacted BPCL's reported GRM?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>The major impacts are a couple of factors. First, both refineries had planned shutdowns—30 days for Kochi and 25 days for Mumbai. Second, our Russian crude throughput was slightly lower this quarter at 31%, compared to 34–35% in earlier quarters. Third, the refining spreads were slightly lower, though not significantly. The main impact, however, was from the shutdowns, which led to higher energy consumption and lower throughput.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Our marketing inventory losses were closer to INR 722 crores. Any particular reason for this? Also, how many days of product inventory do we typically maintain?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>In marketing, we generally maintain around 25–27 days of inventory. Inventory losses or gains typically occur due to price movements. If prices decline, we may record inventory losses; if prices rise, there can be inventory gains. This quarter, the losses were aligned with the price trends, and there was no abnormal inventory positioning.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>One more question: Do we have any long-term contracts with Russian crude suppliers? Also, for calendar year CY '25, could you provide some details on crude sourcing—how much is long-term and how much is short-term?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We generally follow a principle of around 55% long-term imported crude and 30–35% for spot purchases. For CY '25, we are maintaining the same ratio. Long-term sources include Saudi Arabia, Abu Dhabi, the U.S., Iraq, and other conventional suppliers. Regarding Russian crude, we do not have long-term contracts. We procure it on a short-term basis, typically M-2 (two months in advance) from the market.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Sir, last question. Considering the very weak GRM at present—around $1 per barrel or even less—if this situation continues for another month, and on top of that, we have to procure spot crude at a slightly higher cost, say $2–$3 per barrel premium, don’t you think this could negatively impact refining profitability in the near to medium term? Please correct me if I’m wrong.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Current trends show that gasoline cracks have declined to almost zero or negative levels, but fortunately, gasoil cracks are still holding at $13–$14 per barrel. With this backdrop, there could be a small impact on GRM. Regarding crude sourcing, if the processing of Russian crude reduces, there will be some impact, but it is not significant. Today, Russian crude is available at a $3–$3.2 discount. So even if the throughput from Russian crude drops from 35%, the impact is limited. Crude supply is sufficient, and the only adjustment is to source from alternative grades or regions if needed. The impact, if any, will be minor.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Do you think, in the long run, we will be able to procure Russian crude at a discounted rate after 6–12 months? What is your in-house assessment?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We see this as a temporary situation. Russian crude production has not been reduced. The current disruption is mainly due to sanctions affecting vessels and insurance, which has caused a short-term supply-chain imbalance. This should be resolved in 2–3 months as the market and trader community adjust, and Russian crude flows are expected to resume.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Iqbal Khan from ICICI Prudential Life.</p>
<h3 class="underline_top">Iqbal Khan:</h3>
<p>Sir, regarding the Russian discount—you mentioned it was around $3–$3.5 in Q3. Recently, we have read news that Russian crude prices have fallen further. For January and February, we are sourcing Russian crude. Are we benefiting from this increased discount, and could you provide an update on the current levels? Are we availing the benefit of this recent drop in Russian crude prices?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Our spot procurement deals are done on an M-minus-2 basis, meaning two months in advance. For January and February, the deals were completed in November and December. We are getting sufficient cargoes for these two months. The discount levels are expected to remain similar. However, for March, the volume of Russian crude we can procure may not match previous months.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Amit Murarka from Axis Capital.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>So my question is again on the capex side. You mentioned that for the Bina expansion, most of the capex will start in FY '26 and '27. Are you providing any absolute guidance for FY '26 as well as '27 now?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We are currently firming up the capex numbers for FY '25-'26. Based on initial indications from all units, the capex is expected to be around INR 18,500–19,000 crores. So, indicatively, we are looking at approximately INR 19,000 crores for FY '25-'26.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>And for FY '27, could it go up to around INR 25,000 crores?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, we estimate it could be around INR 22,000–23,000 crores, but the number for FY '27 is yet to be finalized.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>The 5-year capex plan was about INR 1.5 lakh crores, correct?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Correct.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>So that plan is still on track? Would FY '28-'29 see higher numbers to meet this target?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. Our total capex aspiration is around INR 1.7 lakh crores. Out of this, the Board has already approved projects totaling approximately INR 1.3 lakh crores. This includes around INR 25,000 crores for exploration in Mozambique and Brazil, INR 50,000 crores for Bina, around INR 5,000 crores for Kochi refinery petrochemical project, and INR 20,000–25,000 crores for CGD network expansion. From FY '26-'27 onwards, annual capex could be around INR 25,000–30,000 crores.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>On the GRM, you mentioned that GRMs were weaker due to shutdowns and lower Russian crude sourcing. Was there also some inventory loss?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No. Generally, we do not calculate inventory gains or losses for refining because our average inventory is very low—less than 10 days. Our procurement cycle averages 1 month, and the refining inventory processing cycle is around 10–11 days. This ensures minimal impact from inventory gain or losses. Occasionally, very old cargoes might have a small impact, but that is why BPCL avoids including inventory gains or losses for our refineries.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>Understood. And just the last question on fuels. Marketing volumes have generally been growing slower than the industry, I believe, due to some gains by private refiners and marketing companies. Recently, there were reports that outlets impacted by this are demanding better margins since their volumes are declining. Is there any discussion ongoing regarding a revision of dealer margins?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, the revised dealer commissions have already been implemented in the last quarter. There is no separate discussion ongoing. Yes, I agree that this quarter we are not number one in terms of market growth, but that is only a short-term phenomenon. We expect to regain our position going forward.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Sumeet Rohra from Smartsun Capital.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>Sir, I would like to talk from an investor perspective. You have done exceptionally well, making a profit of INR 10,000 crores after absorbing INR 7,100 crores of LPG under-recovery. While we understand that LPG under-recovery is borne by the government, it still clouds earnings visibility for investors.</p>
<p>The market capitalization of Bharat Petroleum today is roughly the same as it was in 2017, when the company earned around INR 9,000 crores in profit. Today, we are earning approximately INR 20,000 crores. While other public sector enterprises are being re-rated, companies like ours, which are high-quality in terms of ROEs and ROICs, are not reflecting that in the market. This shows a disconnect between our financial performance and market perception.</p>
<p>With Project Aspire, we could potentially make INR 30,000 crores, but if the market doesn’t recognize earnings and visibility, investors will not get the returns they expect. Proper communication from the company, the ministry, or the government is crucial for the market to correctly value the company and for P/E and price-to-book ratios to adjust accordingly.</p>
<p>On the topic of Russian crude, there has been significant exaggeration. With recent developments, such as statements from Mr. Trump urging an end to the war, it could be assumed that Russian oil supply may remain largely unaffected, maintaining the status quo.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. First, regarding LPG, I want to clarify that for the period April to December, we have recorded a net negative buffer of INR 7,228 crores, which has been taken as a debit to the P&L. LPG is a controlled product, and pricing is regulated by the Government of India. In previous years as well, the government has supported the industry with around INR 22,000 crores. We are hopeful that by the end of the year, the government will provide support for this LPG under-recovery, as the pricing is entirely guided by the government.</p>
<p>Regarding Russian crude, in the very short term, there may be a temporary shortage of Russian cargo. If the Russia-Ukraine war ends, it would be beneficial as more supplies would come to the market. Likewise, if sanctions are lifted, complete supplies can reach all markets, which would improve supply relative to demand growth. Overall, an end to the Russia-Ukraine conflict would be positive for the industry.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Sabri Hazarika from Emkay Global Financial Services.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>I have a few questions. Firstly, in the current scenario, assuming diesel cracks remain around $11–$12 and petrol around $5–$6, and Russian crude share drops to around 10–15% with possibly no discount, based on your configuration, what kind of GRMs can your company report?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We cannot predict the GRM precisely, as it depends on several factors including crude sourcing, premiums paid, and yields. However, on average, we expect refining margins to remain at a similar level. Gas oil cracks, which constitute the majority of our processing, are around $13–$14. As long as these spreads remain commendable, we can expect GRMs to stay at a similar level, without much negative impact.</p>
<p>So, a GRM of around $6–$7, given diesel cracks of $13–$14, is something that can be reasonably expected.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, we cannot give exact guidance, but we can safely assume that if gas oil cracks are at $13–$14 and gasoline at $5–$6, the GRM would reflect that. Ultimately, it depends on the international spreads over the next couple of months.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Right, sir. Secondly, regarding your capex plan, what peak debt level do you envisage as comfortable for the company at the peak of the capex cycle?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We do not expect peak debt to exceed a 1:1 ratio on a stand-alone basis. This would be the comfortable zone when the projects complete by '28–'29, which is our target.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Understood. Lastly, regarding LPG and working capital, considering that Q4 has seen seasonal increases in oil and LPG prices, along with excise duty payments, are you comfortable in terms of working capital, or could there be a short-term spike in debt?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Even in December, our gross debt-to-equity was 0.24, and we have nearly INR 15,000 crores invested in oil bonds. On a net basis, debt-to-equity is around 0.1 or less. By March, if there is no major spike in crude prices, we do not foresee a significant increase in working capital requirements. Our internal cash generation is sufficient to meet capex, which is estimated around INR 16,000 crores for this year. Excise duty payments do require some additional borrowing, but this is manageable within our normal working capital framework.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Got it, sir. A small bookkeeping question: ATF volumes seem to have declined year-on-year. Any specific reason?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We lost one customer in the tendering process, which caused the decline. We have gained some other customers, so volumes should recover in subsequent quarters.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Nitin Tiwari from PhillipCapital.</p>
<h3 class="underline_top">Nitin Tiwari:</h3>
<p>Regarding the Andhra Pradesh refinery, can you provide more details about the estimated size and total capex? You mentioned INR 6,100 crores allocated for pre-project activities. What is the incremental capex and timeline for this project?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>The Board has approved INR 6,100 crores for pre-project activities, mainly for land acquisition, where we are looking at around 6,000 acres. This allocation also covers DPR and FEED studies. These pre-investments will take approximately 6–9 months to complete, after which we can finalize the configuration and take the final investment decision (FID).</p>
<p>Broadly, we are considering a 9–12 million metric ton crude train with a significant petrochemical component. For a 9 million metric ton refining capacity, we expect around 3.8–4 million metric tons of petrochemicals. Roughly, the initial gross capex requirement is estimated around INR 95,000 crores. The Andhra Pradesh government has indicated capital subsidy incentives, and we expect to finalize the FID numbers after completion of the DPR and FEED studies, likely by the end of December.</p>
<h3 class="underline_top">Nitin Tiwari:</h3>
<p>Sure, sir. Sorry, I missed the total investment number you mentioned.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Around INR 95,000 crores at the gross level.</p>
<h3 class="underline_top">Nitin Tiwari:</h3>
<p>INR 95,000 crores. All right. And sir, is the location confirmed, or are you yet to finalize it? Also, will it be a coastal refinery or an inland refinery?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>It will definitely be a coastal refinery. The location is almost identified, and now we have to initiate the land acquisition process. We have already approached the Government of Andhra Pradesh for this.</p>
<h3 class="underline_top">Nitin Tiwari:</h3>
<p>Understood, sir. My second question relates to a recent news item about an excise duty exemption granted by the Supreme Court on MoU sales between oil marketing companies. Could you elaborate on this? And would this in any way be margin accretive for us?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>You’re referring to the recent Supreme Court judgment on an old excise duty valuation case?</p>
<h3 class="underline_top">Nitin Tiwari:</h3>
<p>Yes, I believe so. It was related to the sales that take place between the OMCs.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. This is a long-standing valuation dispute. At the tribunal level, we did not receive a favorable order, and certain demands were raised. The issue pertains to how the assessable value should be calculated for product transfers between OMCs.</p>
<p>Currently, the transaction value is based on the purchase price. The department’s contention is that it should not be based on the purchase price but on another basis since the retail selling price (RSP) differs from the purchase price.</p>
<p>The matter went to the Supreme Court, and the Court has remanded it back to the tribunal to reassess the assessable value. We intend to file a review petition, and we will have to wait to see how the tribunal recalculates the assessable value.</p>
<h3 class="underline_top">Nitin Tiwari:</h3>
<p>Okay, sir. Because I think the news item mentioned that excise would be exempted on these sale and purchase transactions. So I was wondering if any benefit would accrue to us because of that exemption?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>There is no exemption of excise duty. None at all. It is purely a dispute related to the valuation rules.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Hardik from ICICI Securities.</p>
<h3 class="underline_top">Hardik:</h3>
<p>We’ve seen crude oil prices rally sharply and recently cross $80. If crude again crosses $80, is there any thought on taking a price hike? Any initial sense on that?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>If you look at the demand–supply situation in the crude oil market, we expect a good amount of supply. The recent volatility is only a very short-term, knee-jerk reaction due to Russian crude supply issues. We are not foreseeing crude prices sustaining at these levels. They should come back to the $75–$80 range. The current level is only a short-term phenomenon.</p>
<h3 class="underline_top">Hardik:</h3>
<p>Okay. And sir, one more thing. We have reported a marketing inventory loss, but at the end of the quarter, diesel and petrol international product prices spiked. So what led to this inventory loss? And if it's a real inventory loss, would it get reversed in Q4?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Inventory gains or losses always move in tandem with price trends. If product prices decline during a particular quarter, you will see inventory losses. If prices rise, you will see inventory gains. In Q3, the price trend was downward, hence the loss. If crude prices continue hovering around $80, you may see a reversal in Q4.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Somaiah V from Avendus Spark.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>A few questions, sir. First, on the Russian crude sourcing—you mentioned M minus 2. For January, you would have booked in November. Does that mean the average price would be November price minus discount? Or how exactly does it work?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No. We finalize only the discount and the commercial terms in advance. The actual crude price is always based on the delivery month. For example, crude delivered in January will be priced at January prices; crude delivered in February will use February prices. Only the discount and credit terms are fixed upfront, while the base crude price remains variable.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Understood, sir. So, second question on crude sourcing: on a blended basis, what would be the premium for non-Russian crude? And what premium would we be paying for Russian crude?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No, we cannot compare crude grade-to-grade because every crude has a different CAV — meaning, the value of output it gives. It is very difficult to say which crude is better or cheaper in absolute terms. A crude can be cheaper or costlier depending on refinery configuration and the type of products it yields. So we assess crude economics based on what value each grade generates for our refinery and then source accordingly.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Understood, sir. I was only trying to understand whether crude that replaces Russian crude, of the same quality, would be available at par with Brent or at a premium to Brent in the current environment?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No. Russian crude generally comes at a discount. Other crudes typically do not offer such discounts — that is the key difference.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Okay sir, and since you mentioned long-term sourcing, what is the usual tenure of these long-term basis contracts?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Long-term crude contracts are generally for one year. All our crude term contracts are signed annually.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>So we have a one-year volume offtake agreement that gets renewed every year?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, yes. Not for Russian cargoes, but for other grades. About 55% of our crude import requirement is contracted on a one-year term basis.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Got it, sir. And on the Andhra Pradesh refinery — how are you planning the sequencing? Will the work start only once Bina expansion is nearing completion, or will both run in parallel? I'm trying to understand the capex cycle.</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Broadly, we will reach a conclusion by December. By then, the DPR, configuration studies, and FEED studies will be completed. Only after that will we know the detailed capex requirement. In parallel, we are also exploring JV partnership options.</p>
<p>Once these are finalised, we will have clarity on the project schedule. But as of now, we expect the commissioning period to be around 48 months from the date of FID. The project may start in parallel with Bina; by the time Bina reaches mid-stage, the Andhra Pradesh refinery project is expected to kick off.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Okay, sir. Also, on Bina Petchem — can you give the product slate for the 3 million tons of output? Just a rough estimate?</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>Yes. So, PE is 1.2 million tons, PP is 0.55 million tons, and the remaining volume is BTX.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Okay. Sir, also for FY’26, you mentioned roughly around INR 19,000 crores of capex. Is there any segment-wise split you can share?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We will share the detailed breakup. Broadly, most of it will go towards CGD expansion and the Bina expansion. A smaller portion will go towards exploration activities. We will share the split separately.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Okay, sir. Sir, the LPG under-recovery number that we are reporting — does it include the normal marketing margin we would have earned, or is that over and above?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>If we receive the entire amount, it ensures that our normal marketing margin is protected.</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Okay. Sir, on the CGD performance — can you give an update on the current volumes? And regarding the recent gas allocation cuts, does anything change for us in terms of our outlook or investments in this business?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. In CGD, we are broadly on track in terms of our MWP targets. For CNG stations, we have achieved 739 stations — almost 200% of our MWP target. For pipeline laying, we have completed around 21,555 inch-kilometers, which is about 137% of the MWP.</p>
<p>We are slightly short on PNG domestic connections. Our target is 1.11 crore connections, whereas we have achieved only 4.63 lakh — around 20% of the MWP.</p>
<p>In terms of sales, we achieved 96 TMT of CNG volume for the 9-month period, and volume growth is strong. We expect a good amount of incremental EBITDA from next year onward from the CGD business.</p>
<p>For CNG station additions: for FY 2024–25, our target is 150 stations; for FY 2025–26, 165 stations; and in subsequent years, around 200 stations annually. That is our broader plan.</p>
<p>We have spent around INR 1,200 crores of capex on CGD expansion in the 9-month period.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Mr. Somaiah, does that answer your question?</p>
<h3 class="underline_top">Somaiah V:</h3>
<p>Yes, it did, sir.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Vikash Jain from CLSA.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>I have one question on the Russian discount. You mentioned a number around $3 per barrel. I’m sure this is mandated for us in India. How has this number changed over the last few months or through this calendar year? What has been the broad range?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>During the 9-month period of this year, there hasn’t been much change. At the beginning of the year, the discount was around $3.5 to $4 per barrel. Now, it has come down to $3 to $3.2. So, no major change this year.</p>
<p>Compared to the previous year, during FY ’23–’24, we used to get around $8.5 discount. But this year, it has largely stayed in the $3 to $3.5 range.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>Sir, just to clarify — this discount is what you negotiate with them for crude delivered to India, correct? We do not take any responsibility for shipping, insurance, etc.?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Delivered, delivered, delivered — and with a precondition that they should not move the cargo on any sanctioned vessels.</p>
<h3 class="underline_top">Vikash Jain:</h3>
<p>Okay. And regarding your expectation that Russian crude may fall from 30% of the slate to 20% — is this because the fleet available to them has become more constrained, around 20–25% of the total, if I remember correctly? Is that what your estimate is based on, or is it just a broad guesstimate?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>No. For January and February, we have sufficient Russian cargoes. For the March window, we have not yet received any offers. Our estimate is that supply may reduce to around 20% — meaning instead of processing 30%, we may process about 20%. But these are only guesstimates. Once the market window opens, we will see how many cargoes are actually available.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of S. Ramesh from Nirmal Bang Equities.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Looking at the CGD business, my calculation shows that you're doing about 3.5 million kgs per day. Is that correct, based on the 96 TMT you have done year-to-date?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes, 96 TMT — so per-day calculation will work out to that level, yes.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Given that the capex cycle is peaking in the CNG business across your stand-alone GAs, how do you see capex trends for FY ’26, FY ’27, and FY ’28?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We are allocating around INR 3,025 crores of capex for the CGD business for FY ’25–’26, and around INR 3,050 crores for FY ’26–’27. That is our broad capital allocation for CGD.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>So when you say you expect EBITDA to be positive in FY ’26 — based on the current infrastructure plus additions in FY ’26, and this level of capex — you expect positive EBITDA considering the current gas cost environment, especially due to the reduction in APM gas?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Yes. We are expecting that from FY ’25–’26 onwards, the CGD business will generate positive EBITDA margins. Although the APM gas allocation has come down significantly and we are sourcing more market gas, in the short term we are not passing this burden to customers. But in the long term, the cost will have to be passed on. Still, from FY ’25–’26, we expect healthy EBITDA margins from the CGD segment.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Is it possible to share your gas sourcing mix for the CGD business, based on the current APM gas allocation? How much would be from APM gas versus market-priced gas and LNG?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>For the latest quarter, about 49% of our requirement is met through APM gas allocation, and the remaining 50% deficit for CNG is sourced from the market, mostly RLNG on a spot basis. Since we do not expect to receive 100% APM gas going forward, we are exploring long-term deals — either Henry Hub–based or other index-based cargoes — to secure supply for the shortfall.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Two more thoughts: First, how do you see the rollout of LNG retail outlets in terms of capex and target volumes? And second, for biogas, what kind of volumes do you expect?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We have already commissioned two LNG stations and another ten are in the pipeline. In the initial years, we do not expect large volumes, but we are building the infrastructure so that we are ready when vehicle movement picks up. The capex requirement for LNG retail is relatively small — for around 10 RLNG stations, the total capex will be about INR 150–200 crores.</p>
<p>For biofuels, our plan is to complete at least 26 CBG plants, either on our own or through JVs. We have already announced two JVs — one with GPS Renewables, and another in progress with Praj Industries. The total capex for these 26 plants will be around INR 2,500 crores, and we expect completion over the next two to three years. These plants can produce about 100 TMT; in terms of gas volume, the output may be around 200–300 TMT.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>On the renewable energy side, ONGC and HPCL are planning listings. Are you considering hiving off your renewable portfolio into a separate entity for value unlocking?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>We are still in the early stages of building renewable assets. Once we reach a meaningful scale, we will evaluate whether hiving off into a separate entity creates more value, or whether retaining the assets on our balance sheet is better — especially since there are certain tax advantages in keeping them within the existing structure. Once the portfolio scales up, we will assess which option provides better shareholder value.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>One last question, if I may. Based on the data you receive from consultants, do you see any refining capacity closures globally or in Asia over the next one to two years? What is the expected trend?</p>
<h3 class="underline_top">V.R.K. Gupta:</h3>
<p>Based on the information we are receiving from consultants, there will definitely be some refinery capacity closures — but these will be outside India, not within India. As part of net-zero ambitions, several refineries globally are expected to shut down. We do not yet know the exact quantum of closures, but the overall trend suggests capacity reductions outside India.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Ladies and gentlemen, this was the last question for today’s conference call. I now hand the proceedings over to the management for their closing comments.</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>Thank you, everyone, for participating in the call, and thank you, Mr. Varatharajan.</p>
<h3 class="underline_top">Varatharajan:</h3>
<p>Thank you for that.</p>
<h3 class="underline_top">Moderator:</h3>
<p>On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.</p>
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Click Here To Listen Q3 FY25
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Conference Call Recording
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Q2 FY25
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Read Transcript
<h3>Moderator:</h3>
<p>Ladies and gentlemen, good day, and welcome to the Q2 FY ’25 Earnings Conference Call of Bharat Petroleum Corporation Limited, hosted by Antique Stockbroking. 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 any assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone.</p>
<p>Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stockbroking. Please go ahead, sir.</p>
<h3 class="underline_top">Speaker (V. Sivasankaran):</h3>
<p>Thank you, Shifa. Good morning, everyone. I would like to extend a very warm welcome to all the participants on this call and the management of BPCL led by Mr. V.R.K. Gupta, Director Finance. I will now request Rahul from BPCL to introduce the management and make the disclosures before we start our initial remarks. Rahul, please.</p>
<h3 class="underline_top">Speaker (Rahul Agrawal):</h3>
<p>Yes. Thank you, Mr. Varatharajan. Good morning. On behalf of the BPCL team, we welcome you all to this post Q2 results con-call. Before we begin, I would like to mention that some of the statements that we would be making during this call are based on our assessment of the matter, and we believe these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results.</p>
<p>Since this is a quarterly results review, please restrict your questions to the Q2 results. I now request our Director Finance, Mr. V.R.K. Gupta, who is leading the BPCL team for this call, to make his opening remarks. Thank you, and over to you, sir.</p>
<h3 class="underline_top">Speaker (V.R.K. Gupta):</h3>
<p>Good morning, everyone. Wish you all a very happy Diwali in advance. Welcome to the post-Q2 results con-call. Thank you for joining us today. I hope you were able to go through our results for the quarter.</p>
<p>On the macro side, the global economy is expected to maintain an annualized growth of 3.2% through 2024 and 2025. However, geopolitical and trade tensions pose risks to inflation. The Indian economy continues to be the world’s fastest-growing major economy and is likely to grow in the range of 6.5% to 7.2% in FY ’25 as per various forecasts.</p>
<p>But the geopolitical situation remains complex and presents significant challenges to global economic stability. As conflicts evolve, they not only impact oil prices but also create uncertainty in trade routes and investment climate.</p>
<p>Oil prices have remained volatile, driven by geopolitical risks, uncertain demand from China, and macroeconomic factors like low inventories and easing inflation. These factors are expected to keep prices sensitive to further developments in the near term.</p>
<p>Consumption of petroleum products in India has continued to grow with an overall growth of 4% during H1. Major products such as petrol, diesel and ATF grew by 7.2%, 0.9% and 10.4% respectively. BPCL registered a market share gain of 0.1% in MS retail and 0.12% in HSD retail among PSUs during the first half of the current financial year.</p>
<p>Retail volume for MS grew by 6.5%, while HSD saw a degrowth of 0.64% year-on-year during H1.</p>
<p>We estimate that retail demand will grow by about 6% for MS and 1.5% for HSD during FY 2024-25. HSD demand in the urban market is likely to witness relatively slower demand than rural and highway markets due to transition to CNG.</p>
<p>On the operations side, our refineries continued their strong performance and achieved a throughput of 10.28 MMTPA, which is almost 114% of the nameplate capacity.</p>
<p>Our distillate yield was 84.33% in the quarter, one of the highest among Indian refineries.</p>
<p>This quarter evidenced a significant fall in international product cracks as compared to previous quarters. Gasoline Singapore crack fell to $6.83 per barrel in Q2 from $8.58 per barrel in Q1, and gas oil crack fell to $13.69 per barrel in Q2 from $14.76 per barrel in Q1.</p>
<p>Despite this, our refineries recorded a GRM of $4.41 per barrel in the current quarter and $6.12 per barrel for the half year, which is a premium to Singapore GRM. Singapore GRM stood at $3.58 per barrel for the quarter and $3.56 per barrel for H1.</p>
<p>The PDPP plant at Kochi achieved an operating capacity of 80.2% in H1, compared to 68.3% in the previous year. GRM for petrochemicals was INR 421 crores, nearly $0.79 per barrel for H1 2025, compared to INR 235 crores and $0.46 per barrel during the previous year.</p>
<p>On the marketing side, our domestic market sales grew by about 1.6% year-on-year during the quarter to 12.39 MMT.</p>
<p>We continue to generate the highest throughput per retail outlet among our peers with 151 KL per month versus 137 KL per month PSU average.</p>
<p>We commissioned more than 540 new retail outlets in H1 FY ’25 and plan to take our network to over 23,000 by year-end.</p>
<p>We have added around 90 new CNG outlets during the first half, taking the total to 2120 stations, and plan to add another 300 during FY ’25.</p>
<p>We achieved our highest-ever ethanol blending of 14.97% during the quarter and now provide E20 blended fuel at around 4,400 retail outlets.</p>
<p>During the quarter, BPCL entered the future fuels segment by commissioning our first LNG station at a company-owned company-operated outlet at BP Avinashi, Coimbatore. Another LNG station will soon be commissioned at Pananchery, Kerala.</p>
<p>We commissioned 16 BeCafé outlets during H1 ’24-’25, taking the total network to 22. At BeCafé, we aim to provide a state-of-the-art café experience at value-for-money pricing within our retail outlets.</p>
<p>We are also participating in NHAI’s wayside amenities plan. BPCL commissioned two wayside amenities during H1 ’24-’25 — in Vadodara and Haryana on the Western Peripheral Expressway.</p>
<p>About new projects, BPCL’s Board recently approved entering into a JV agreement with Sembcorp Green Hydrogen India Private Limited for renewable energy and green hydrogen, subject to regulatory approvals.</p>
<p>The groundbreaking ceremony for Kochi and Bina CBG plants was conducted virtually by the Honourable Prime Minister on 2nd October 2024. BPCL plans to set up 26 such CBG plants in the near future.</p>
<p>The BPCL Board has also approved entering into a JV with GPS Renewables Private Limited for setting up compressed biogas plants across India.</p>
<p>Without further ado, let me guide you through the financial highlights.</p>
<p>The revenue from operations stood at INR 1,17,952 crores for the quarter. Profit after tax stood at INR 2,397 crores. This is after absorbing LPG losses of around INR 2,104 crores and marketing losses of around INR 1,100 crores.</p>
<p>Against an estimated capex of INR 16,400 crores for FY ’24-’25, we have spent INR 5,662 crores during April to September.</p>
<p>Our standalone net worth as of 30th September is INR 76,245 crores. We distributed around INR 4,447 crores of dividend during the quarter.</p>
<p>The earnings per share for the quarter are INR 5.61 per share. As of September ’24, we are at fairly low levels of debt. The debt-equity ratio at standalone gross borrowings level is 0.28, with gross borrowings of INR 21,529 crores.</p>
<p>Against these borrowings, we have current investments, including oil bonds, worth around INR 11,719 crores.</p>
<p>At group level, the debt-equity ratio is 0.64 with gross borrowings of INR 49,187 crores. This concludes my comments, and we will be happy to take your questions now. Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Ladies and gentlemen, good day, and welcome to Q2 FY '25 Earnings Conference Call of Bharat Petroleum Corporation Limited hosted by Antique Stockbroking. 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 any assistance during the conference call, please signal an operator by pressing star, and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stockbroking. Please go ahead, sir.</p>
<h3 class="underline_top">V Sivasankaran:</h3>
<p>Thank you, Shifa. Good morning, everyone. And I would like to extend a very warm welcome to all the participants to this call and the management of BPCL led by Mr. V.R.K. Gupta, Director Finance. I will now request Rahul from BPCL to introduce the Management and make the disclosures before we start our initial remarks. Rahul, please.</p>
<h3 class="underline_top">Rahul Agrawal:</h3>
<p>Yes. Thank you, Mr. Varatharajan. Good morning. On behalf of the BPCL team, we welcome you all to this post Q2 results con-call. Before we begin, I would like to mention that some of the statements that we would be making during this con-call are based on our assessment of the matter, and we believe that these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. Since this is a quarterly results review, please restrict your questions to the Q2 results. I now request our Director Finance, Mr. V.R.K. Gupta, who is leading the BPCL team for this call to make his opening remarks. Thank you, and over to you, sir.</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Good morning, everyone. Wish you all a very happy Diwali in advance. Welcome to the post-Q2 results con call. Thank you for joining us today. I hope you were able to go through our results for the quarter. On the macro side, the global economy is expected to maintain an annualized growth of 3.2% through 2024 and 2025. However, geopolitical and trade tensions pose risk to inflation. Indian economy continues to be the world's fastest-growing major economy and is likely to grow in the range of 6.5% to 7.2% in FY '25 as per various forecasts. But geopolitical situation remains complex and present significant challenges to global economic stability. As conflicts evolve, they not only impact oil prices, but also create uncertainty in trade routes and investment climate. Oil prices have remained volatile, driven by the geopolitical risk, uncertain demand from China and macroeconomic factors like low inventories and easing inflation. These factors are expected to keep prices sensitive to further developments in the near term.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>Sir, in terms of the increase in debt that has happened, if I look at your reported -- I mean, the analyst information from about INR25,000 crores, it's gone to about INR31,000 crores. This is purely on account of the capex and losses of LPG will get captured in the working capital borrowings, I would believe, right?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Actually, the main what happened is that we have distributed around INR4,500 crores of dividend in the month of September. That is a major and some sort of advance that we have paid subsequent to that. That is a major reason and a little bit of changes in the inventories, which have gone up there around INR3,000 crores. So other way, they are more or less same only. There is no major -- capex is per the plan, only INR5,600 crores we spent, and we have internal generic also much more than the capex spending. So whatever increase in a little bit borrowing is mainly on account of dividend distribution and a change for a small working capital, inventories have gone up a little bit.</p>
<h3 class="underline_top">Probal Sen:</h3>
<p>One last question, if I may. Is the kind of capex plans that we have, do we have any peak debt or peak leverage number in mind over, let's say, FY '26 or '27, what kind of peak debt and peak level you are targeting?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>In the next couple of years, we are not forcing any debt levels will be a significant increase. Maybe in FY '27, '28 onwards, we are foreseeing the borrowings will increase. As at the capex, even in the next 1 or 2 years, we are expecting around INR18000 crores to INR20000 crores capex plan. So with the estimated internal generation, we are not foreseeing any big jump off the borrowing. But '27, '28 onwards peak capex will happen for both the major projects of Bina and Kochi. That point of them our project financing withdrawal will go up and borrowings will go up.</p>
<h3 class="underline_top">Moderator:</h3>
<p>We have the next question from the line of Sabri Hazarika from Emkay Global.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>So firstly, on your GRMs, you mentioned that inventory is not a significant impact, but there is like a lot of volatility. I mean the cracks that have said they have fallen but not that much say sequentially, but your GRM was down from, sir, almost like $8 to $4.4. So it's like still inventory only or there are some other adjustment also, because your GRMs have been much higher than your peers for the previous few quarters. So anything specific on this?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>A couple of things. One is our Russian product throughput percentage has come down slightly. Earlier quarters, it is almost 39% to 40%. This quarter due to some shutdowns of our Bina units and Kochi, so our Russian throughput has come down from 39% level to around 34%. That is one reason, small impact. Inventory impact will be there. I'm not saying inventory will not be there, but it is not a very significant jump. But the fact is that the cracks have come down during this quarter, even on a sequential basis, significant direction for gasoline. Gas oil around $1.5 has come down, but gasoline have come down drastically.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>And this Russian discount levels have also compressed or it has remained same only?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No, more or less, same only. No major change around same level in first quarter and second quarter, there is no major change. Only volumes may be different.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>$2 to $3 that's the number or...</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Some cargoes, some cargoes, you will get 3, 3+, some cargos maybe 3 that range only.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Secondly, I mean, given the petrol/diesel marketing margins now and LPG losses in on the contrary, going up. So your working capital right now will remain more or less stable? Or do you see this going up, I mean short-term debt and working capital?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Working capital, we are not foreseeing any major changes, maybe inventory for 1 or days additional inventory if we keep it because the prices are lower side. Slightly the working capital may go up, otherwise, working capital, we are not foreseeing any significant jump of the working capital. Once we get the LPG subsidy from the government of India, then it helps a lot in the working capital.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>Right. And one small question, you mentioned capex was around INR5,600 crores, right, H1?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Right. Right. Right.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>And full year, you are still like maintaining INR16,000 crores, INR17,000 crores or?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Our plan is INR16,000 crores. Maybe somewhere around we will end up around INR15,000 crores to INR16,000 crores range.</p>
<h3 class="underline_top">Sabri Hazarika:</h3>
<p>INR15,000 crores to INR16,000 crores, that's your overall run rate. Okay. Fair enough.</p>
<h3 class="underline_top">Moderator:</h3>
<p>We have the next question from the line of Amit Murarka from Axis Capital.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>Sir, my first question is on capex. So I think you mentioned INR15,000 crores to INR16,000 crores this year. Next year, we will go up to INR20,000 crores. And then after that, could you just simply give a broad range of how capex will escalate '27, '28?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>So we are expecting this year, we will be around INRcrores 15,000, INR16,000 crores. Next year, we have a plan of around INR18,000 crores. Subsequently, we are expecting INR20,000 crores to INR22,000 crores end of '28. '29, we are not worked out exactly maybe somewhere in the range around INR25,000 crores. Exactly, we have not worked well, but we are expecting it that way, in '28 -- '29.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>Okay. But you would still fall short of your 5 year plan, right it is INR1.5 lakh-odd crores.</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No, our plan is INR1.5 lakh crores, but we have to see how much CGD, how much we are going to spend, what is the minimum required for our minimum work program. Maybe there, we may not have 100% capex investments with it. There may be a shortfall in CGD networks. Otherwise, major projects you are going to spend, except the CGD. CGD we have approved around INR48,000 crores of capex, but the actual capex may not be to that extent, maybe around 80% or 90% will be there.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>Also, a question on marketing margin, like where LPG losses is understandable. But even otherwise, if you calculate the marketing margin, at least it seems to have dropped like order fuel margins are very strong in Q2. So it seems margins on other products have actually dropped in the quarter. So could you just help understand that a bit better?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No, margin loss mainly on account of only the inventory losses of around INR1,100 crores during this quarter. Otherwise, there is no inventory losses, we are not seeing any reduction in the marketing margins. Only the volumes of diesel is not grown this quarter, otherwise, margins are stable, better only.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>Sir, last question from me. So I mean, you've generally seen the product cracks have been quite weak in the last few months and LNG has gone up to $13 plus. So even though you have bottom upgradation at some of the refineries now. Is it making more sense to you refinery fuel rather than LNG now at these kind of prices and lower cracks?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Actually, every month, we compare whether LNG or alternative to naphtha, which is a better hedge. Every month, this thing happens, naphtha to LNG, but fuel oil, generally, we have because we need to have a larger emission. So we prefer either naphtha or RLNG as alternatives.</p>
<h3 class="underline_top">Amit Murarka:</h3>
<p>Yes, sir. I understand that, but currently, is it making more sense to use alternate fuels than take LNG?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>We can use a little bit. We can use but at the same time, we have a long-term agreement for the our RLNG offering, but also we have to take that RLNG offtakes. So in case of very good market for our RLNG, slightly some consignment we shift to the market and we use in naphtha. But our long-term commitments, we have our RLNG that will continue.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of S. Ramesh from Nirmal Bang Equities.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>The first thought is in terms of the potential growth for, say, FY '26, '27, do you have any visibility on the capitalization of the CGD asset? How much would that be? What is the kind of upside you can expect on volumes and EBITDA per SCM and broadly in terms of profitability?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Let me explain about the capex first. CGD from this year onwards, we are targeting around INR3,000 crores, INR3,500 crores capex target for CGD business that includes for our CNG stations, our last mile connectivity for PNG connections and their network for the CGD. In terms of the volumes, this year, we are expecting around 120 TMT volume from the CGD sales retail. Maybe this growth will continue, maybe. We are expecting 15% to 16% CAGR will continue for the CGD side because the networking we are expanding every year, we are creating 300-plus of CNG outlets, we are adding to our network. And these volumes will go around 15% to 16% of growth subsequent year.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Sir, in terms of the number of CNG stations in your stand-alone GAs, can you give us a number? And how do you see that grow in the next 2 years?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>So we are expecting this year CNG stations, 150 CNG stations, we are expecting this year. Next year, 165 per plan. '26, '27 182 we are going to add. And '27, '28 around 200, maybe around 800 CNG stations in the next 2, 3 years, we are going to add.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>And how many do you have now as on date, which are in commercial operation?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>600 plus we have in our own GAs.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Sir, second part is if you look at the refining business, what is your reading in terms of any potential growth levers like capacity reduction or improvement in petrol and diesel demand globally in India? So where do you see the outlook for spreads? I understand it's volatile, but in terms of the fundamentals of demand, supply, is there any visibility on supply reduction through capacity rationalization? What is your take on that?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Supplies side what we are at least estimating is this whatever steps have been moderated in the last couple of quarters, this will continue for another couple of quarters because instead of supply side, actually we are expecting from the demand side. Once the China demand picks up, then demand/supply gap will be corrected in terms of gasoline and gas oil both. We are expecting at least half of the winter will be next year, beginning of the quarter, the -- that will improve.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>So one last on petrochemical, how do you see the outlook for Kochi petrochemicals? And how do you see the outlook for your Bina cracker because right now, margins are at multiyear trough? So there's an expectation that may not improve till CY '27 or '28 according to global consultants. So would that have any impact in the terms of timing of your Bina petrochemical project? What is your reading on that?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No. A couple of things, on PDPP, if you see our operating capacity has gone up 80.2%, which is almost much better than the world average plants for such types of petrochemicals. This, at least on the operating reliability side, we have achieved 80.2% in PDPP. On the profitability side, it is a international price dependent. So due to the Chinese demand, the prices are moderated, but still, we have made a good amount of 0.79 of GRM barrel for PDPP.</p>
<p>In terms of Bina, anyhow, the commissioning will happen in FY '28, '29. So by the time the additional supplies or whatever price correction it is going to continue, but by the time, it will correct it. Long-term averages, if you see, it is a good spread for petrochemicals for Bina also. But anyhow that we commissioned the first consignment will come only in FY '28, '29. By the time, the price should correct.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Kirtan Mehta from BOB Capital Markets.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>I had a question on the auto fuel margin. They are at currently at quite high level as oil price hike corrected. Would we be passing this to the consumers in the near future? Or is it sort of being held at the current level because of the lower refining margin to keep the overall margin in a healthy bucket?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>On the pricing side, actually, we cannot comment exactly at this point of time, at what point of time we can pass on the benefit. Still, we have to wait and see how the crude prices will stabilize because any small geopolitical tensions are up are the prices will creep up again. So we have to wait and see for a longer period of time. Once the crude price stability comes, then we can look at it on the pricing side.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>So is it primarily linked to the crude price stability? Or is it also linked to the lower refining margin as well?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No, both. Even spreads also, we have to look at it now, crudes price as well as spreads also.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>Sure. And what would be sort of the longer-term comfortable auto fuel margin that we can look at? Is it 3.5 per liter, 4.5 per liter which allows us to sort of make a sustainable margin in the session?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>If I feel, around INR3.5...</p>
<h3 class="underline_top">Moderator:</h3>
<p>Ladies and gentlemen, the line from the management has been disconnected. Just give me a moment while I reconnect them. Please stay connected while we reconnect the management. Ladies and gentlemen we have the management online.</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Can you repeat the question? My line got disconnected.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>Yes. Last, basically, I think I was asking what we considered as a sort of a sustainable good fuel within auto fuel margin? Would it be in the range of INR3 to INR3.5 per liter, or would we require higher?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>We are expecting around INR3.5 per litre. Marketing margins, it is sufficient for our capex needs whatever capex you have announced to the internal generation requirement, INR3.500 per KL margins are required.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>Right, sir. In terms of the new refinery plant, there has been several media articles in terms of finalizing the location and other stuff, would you be able to share more details or contours around this. At what stage of the collection we are in?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Still it is work-in-progress only because if you see we are short in refining. And we want to enter in petrochemicals. We are continuously exploring opportunities wherever opportunities are available, we want to put to bridge the shortfall whatever refining side and a little bit investments more on the petrochemicals, but still work-in-progress. Once we conclude on that proposal, then we can explain the details.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>And would it be 100% equity owned by us, or would we be also looking at some of the strategic partnerships as well on the refinery?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>All options, we are looking at it.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>Last question was on the CGD side, you mentioned that we will be doing less than the -- our planned allocation of INR48,000 crores. So what results into the change in the plan?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No, this is required for the minimum work program over a period of 8 years. Now, the only thing of when to invest is the question whether immediately in the next 2, 3 years, we will have to invest or a little bit gap we have to take and subsequently after seeing the volume we have to invest that either we want to take a call, anyhow the volumes have started picking up, a number of CNG stations are going up. Mainly in terms of the PNG connections, there actually, we have to wait and see how the capex requirement is there.</p>
<h3 class="underline_top">Kirtan Mehta:</h3>
<p>Right, sir. And with the recent deallocation of the gas for the CNG, the purchase price, and in that sense, the margin would have gone down for the CNG centers. So does that sort of alter the thinking? Or we think that the margin will still remain reasonable?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No. If you see long-term finally, it's a deregulated product. Even the margins are shrinking for a short period of time, some point of time, the pricing will correct and the prices will revise. So long term, if we see whatever cost of the product, we will pass on to the market, it's a completely deregulated market. So short-term, there may be squeezing of margins, but we are not foreseeing any such situation for a longer period of time.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Sumeet Rohra from Smartsun.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>So sir, firstly, I mean, I would like to touch upon a couple of things from a clarity point of view. So I mean about INR2,400 crores of PAT, we have an LPG loss -- had some refining loss, which is not quantified by management. So sir, if I understand, -- of course numbers would be about INR5,000 crores of profitability. Am I correct on that?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Not clear your question, because in the middle you got actually disconnected. But overall, let me clarify. Our profit after tax after observing LPG loss is INR2,397 crores. During this quarter, our LPG under recovery, we have around INR2,100 crores.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>And you absorbed LPG loss of INR2,100 crores. Am I right?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>INR2,100 crores, right, right. And the marketing inventory loss of around INR1,100 crores.</p>
<h3 class="underline_top">Moderator:</h3>
<p>I'm sorry, sir. The line from Mr. Sumeet has been disconnected. We will proceed with the next question. The next question is from the line of Mayank Maheshwari from Morgan Stanley.</p>
<h3 class="underline_top">Mayank Maheshwari:</h3>
<p>Two questions from my end. One, in terms of the Bina petrochemical expansion, can you just give us an idea of where we are in terms of FID, in terms of the equipment ordering, etcetera, as well? And the second question was more in terms of the marketing side. I think on the diesel front, I suppose, in the second quarter, specifically, we have seen your competition actually grow market share, you have been largely flat. So anything that you're doing on that? And to your earlier comment in terms of, on the CNG side, you are seeing slower growth in, I think the metros and the Tier 1 cities versus rural? Can you just talk to us about what's going on those?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>First question about the Bina Petrochemical project. Actually, the works are progressing well. The cumulative progress is 6.3% in physical terms, vis-a-vis schedule of 7.6%. And all licenses for Bina petchem and refined expansion, units are onboarded, like ethylene cracker unit, HDPE, LDPE swing units, PP unit, all units, the licenses selection are completed and awarded. And the BDEP, the basic design and engineering package received for PP. And butanol unit in work-on-process packages of ECU, HDPE, LLDPE are in progress.</p>
<p>All EPCMs and PMCs for BPREP have been onboarded, all PMC consultants have been onboarded. All contractor for site enabling works have been onboarded and site-enabling work such as construction for boundary wall, side grading, including rock blasting activities are already started in the month of July and progressing well in terms of the Bina.</p>
<p>And second, in terms of diesel, if you see still, we are getting a good market share growth compared within the PSU framework, but overall, including PSU and private, we are losing a little bit of volumes in terms of diesel. But we are foreseeing at least for the next couple of months, we are fighting in the market, definitely we'll go back and get the volumes.</p>
<h3 class="underline_top">Mayank Mistry:</h3>
<p>Anything on CNG side?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>CNG, we are expanding our retail network. CNG retail network deliver we said in the next couple of years, by '27, '28, we are expecting around 700 new stations, CNG stations, we are going to add in our own GA network, currently around 600. With this, the volume growth we are projecting every year, 15% to 16% of every year, CAGR will be here for CGD business.</p>
<h3 class="underline_top">Moderator:</h3>
<p>We have the next question from Sumeet Rohra from Smartsun.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>Sorry about that, I got disconnected. So coming back to my point. So you said that you reported a INR2,400 crores profit – or marketing loss. So effectively, our core number is about INR5,000 crores. Am I right, sir?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>You can take that assumption because if you add that, the 2 numbers to the PBT and the profits will come around that level. Around INR4,700 crores something.</p>
<h3 class="underline_top">Sumeet Rohra:</h3>
<p>Sir, now my second point is that on the LPG point of view, now since it is a regulated product and controlled by the government, and it's mentioning the buffer account. So sir, what is the -- I mean the communication of the dialogue you're having with the government? Because clearly, one thing that is evident that today all marketing companies, BPCL being the pioneer, is not being valued the way its true potential is? I mean, come to think of it, right?</p>
<p>I mean if you could in use, our fuel outlets on a daily basis, but the way this company has been valued is stark contrast to what its potential is. So clarity on the LPG point of view with the government would not only -- visibility. And overall, it would lead to value creation for all stakeholders, right? So if you can pursue this with the government, then get them to figure it out that ultimately, clarity on this is basically the withholding step on building value because we are a consumer company, sir.</p>
<p>Today, which consumer company in India makes INR5,000 crores of profit on a quarterly basis? And in spite of that, you see the market cap where it is. So if you can pursue this matter very strongly, it would be very, very beneficial for all stakeholders, with the government of India being the primary owner of this company. So that's something, sir, if you can look after, it would be best for all stakeholders.</p>
<p>Secondly, sir, there was a recent development on some news, basically, which the wires was sticking out Saudi Aramco and BPCL. Sir, today, I mean, it's a matter of prestige and honour for us to partner with such a big giant. So sir, these things should be outwardly spoken about, right? Because even today, DIPAM also clearly says that all PSUs should build market cap and value.</p>
<p>And clearly, sir, such news has not been spoken about. It's absolutely eye-popping that if you buy up with a company like Saudi Aramco, it is a matter of honour and prestige. So if you can please share some insight and more into this of what we are planning to do exactly, etcetera, etcetera, it will benefit everybody.</p>
<p>And sir, lastly, I wanted to understand is that, what are the steps we are taking for building shareholder value because, I get to understand that when DIPAM was also on road for the PSUs, they always say that weightage is given to market cap creation. And today, what are the steps that we are taking for building market cap, sir?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Yes, a couple of things. One is about the project. We continuously look for opportunities, and the discussions are at very nascent stage. Once you firm up certain plans, definitive will come and brief, that is on the new project side. And the second on the market capital improvement, what we as a company, what we are doing to right investments so that to get better capital employed return capital employed.</p>
<p>And we have started communicating with all investors, regularly, we are interacting with investors, and we are briefing what is your plans, what are the future plans, how the company strategic aspirations. So those things, we are continuously started explaining to the major investors not only in India when we are going outside also in India, Singapore or Hong Kong. Major investors, we are meeting and we are expanding what is our strategic aspirations for the company.</p>
<p>And what is the industry, how it is going to be evolved in the next couple of maybe 5 years, 10 years period? And what are our net zero ambitions? Many things, whatever initiatives we are taking, we are placing to the entire investor community. Now, it is up to the investors how much they can allocate for investments of BPCL.</p>
<h3 class="underline_top">Moderator:</h3>
<p>Sir, I think the line from Mr. Sumeet has been disconnected once again. We will proceed with the next question from the line of S. Ramesh from Nirmal Bang Equities.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>Yes. So if you're looking at your capitalization schedule in terms of your capex, how much should we assume you will capitalize in your gross block this year and over the next 2 years to assess the impact on depreciation? And to what extent will you be able to generate the return on capital employed over the next 2 years?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>No. capex -- current year, our internal target is around INR16,000 crores, but we will be ending up around INR15,000 crores to INR16,000 crores range. We will end up the capex plan. And the depreciation, what our current quarter depreciation is there, maybe slightly another INR100 crores, it will add up. The major capex depreciation is now only once the Bina project commissioning, that is '28, '29. After the project, the significant depreciation will jump.</p>
<p>Otherwise, all small projects, whatever capitalization is happening, or there will be around INR100 crores per quarter depreciation incremental will continue. And next year, we are expecting around INR18,000 crores of capex plan. This is a capex plan for this year and next year.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>No, no. How would the capitalization CGD in the stand-alone entity, wouldn't that add to your gross book?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Around INR3,000 crores, we are investing every year. This year also, our target is around INR3,000 crores. Out of INR3,000 crores, maybe 75%, 80% capitalization will happen and that 20% work in progress will continue. Next year, also similar levels, we are expecting around INR3,000 crores to INR3,500 crores for CGD.</p>
<h3 class="underline_top">S. Ramesh:</h3>
<p>So on this capitalization in CGD, when do you think you'll be able to get normalized return of maybe 10%, 12%, 15%.</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Already returns are started from CGD side. Only PNG side, the volumes are not picking up, but otherwise, CNG stations CNG returns are coming, the volumes already this year, we are expecting around 120 TMT. Next year, also, it will have a good growth of 15% we are expecting. On the PNG side, the volumes are not picking up.</p>
<h3 class="underline_top">Moderator:</h3>
<p>The next question is from the line of Yogesh Patil from Dolat Capital.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Sir, question is related to Mozambique asset. What is the update of the project status of Mozambique LNG project? That's one. Secondly, how much amount we have invested till date in this project? And as a part, lastly, as you have mentioned the capex plan for the next 2 to 3 years, Mozambique commitments are included in it or not?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>So, Mozambique, whatever information we got from the main operator, the ground level work has started, but officially they have not lifted the Force Majeure. We are expecting maybe in the month of January or February officially they may announce Force Majeure. But otherwise, the contractors have started coming back to the field and the security situation has improved a lot compared to previous months. And we are expecting hopefully by January, February, they may uplift the Force Majeure and the project can progress further.</p>
<p>And second, in terms of the investments in Mozambique, as on 30th September, we have invested around $2.15 billion, that is almost INR18,000 crores in our books. And we are expecting another INR20,000 crores investment in the next 5 years for the project.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Is that already considered into the next upcoming capex plans of next two to three? That is a part.</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>That is the part. Whatever we have 1.5 lakh crore our capex plan. It includes for Mozambique as well as Brazil also.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>And if there is a further delay in the Mozambique investment or projects, then our capex can come down by that amount.</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>It can defer. Capex can defer. In cases, there in any delay, capex can defer. But otherwise, based on the current plans, the Force Majeure can -- lifting of Force Majeure can happen January, February, then project will be – as per schedule.</p>
<h3 class="underline_top">Yogesh Patil:</h3>
<p>Sir, lastly, sir, considering the current cracks on the middle distillate, mostly on the petrol and diesel, can we assume that GRMs will rebound more than $6 per barrel in Q3, Q4 or more than that? Any indication you have?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Yes. It depends how the spreads will move because otherwise, whatever current demand/supply for the products, we are not expecting any big jump of spread increase in the next couple of quarters. Only in case if there is any slight improvement in Chinese demand side, then definitely the cracks will improve from the current levels. But otherwise, we are expecting similar levels of cracks only for the next couple of quarters. Maybe after the winter slight improvement will be there. But otherwise, moderated – refinery especially moderate now.</p>
<h3 class="underline_top">Moderator:</h3>
<p>As there are no further questions, I would now like to hand the conference over to Mr. Varatharajan sir for closing comments. Please go ahead.</p>
<h3 class="underline_top">V Sivasankaran:</h3>
<p>Thanks Shifa. I had a couple of questions or points. One is about this market share variation we have seen this time around, we have had a market share gain. Is the source of the market share gain entirely the retail network expansion or is there any other reason why we have had an improvement in the share?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Mainly retail network expansion, only mainly because if you see the market share growth, it's representing from all the markets. It is not the only one specific market that is represented more or less majority of markets, it represented small growth, mainly for network expansion and actually, we are adding continuously every year, 600, 700 outlets we’ll definitely add.</p>
<h3 class="underline_top">V Sivasankaran:</h3>
<p>And on the CGD front, are we in a position now to give on a quarter-to-quarter basis earnings and EBITDA profitability separately? Or do you think it is still too early?</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>But profitability, we are not disclosing anything. Still it is a very small amount compared to the overall profitability of the company. So once we reach the scale from the CGD volume because today the CGD volumes are only 120 TMT. Again, it's almost -- our sale is almost 10 MMT. Very small insignificant at this point of time.</p>
<h3 class="underline_top">V Sivasankaran:</h3>
<p>When you spoke about the number of outlets, you said 500-odd, 600-odd outlets. Does that includes the outlets which we have given to the CGDs to operate as well as...</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>In our own GAs, these are our own GA.</p>
<h3 class="underline_top">V Sivasankaran:</h3>
<p>These are all own GA, okay. That is a pretty large number on a stand-alone basis, yes. Fair enough. Yes. Sure. Thanks a lot to all the participants for taking time out to join the call. I wish you to specifically thank the BPCL management for giving detailed explanation as to the entire question and answer as well as briefing and the plans as well. Thanks, everyone, and have a happy Diwali and have a nice day.</p>
<h3 class="underline_top">V.R.K Gupta:</h3>
<p>Thank you.</p>
<h3 class="underline_top">Moderator:</h3>
<p>On behalf of Antique Stock Broking, this concludes the call. Please, the participant may disconnect your lines. Thank you.</p>
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Click Here To Listen Q2 FY25
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Conference Call Recording
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Q1 FY25
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Read Transcript
<h3>Moderator:</h3>
<p>Ladies and gentlemen, good day and welcome to Bharat Petroleum Corporation Limited Earnings Conference Call hosted by Antique Stock Broking. 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 touch phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stock Broking. Thank you, and over to you, sir.</p>
<h3 class=""underline_top"">Varatharajan S.:</h3>
<p>Thank you, Michelle. Good morning, everyone. I'd like to welcome you all to this call, BPCL's First Quarter Results Call. We have with us the management of BPCL, Mr. Krishnakumar, Chairman, Managing Director, has not been able to join because he had an urgent engagement in Delhi. We have Mr. VRK Gupta, Director Finance, leading the team. We have Mr. Pankaj Kumar, ED Corporate Finance, Ms. Srividya, ED Corporate Treasury; Ms. Chanda Negi, GM, Pricing and Insurance; and Mr. Rahul Agrawal, Chief Manager, Pricing and Insurance. Without much ado, I would like to hand over the call to Mr. Gupta for his opening remarks.</p>
<h3 class=""underline_top"">Rahul Agrawal:</h3>
<p>Thank you sir. Rahul this side. Thank you, Mr. Varatharajan. Good morning. On behalf of the BPCL team, I welcome you all to this Post Q1 Results Con Call. Before we begin, I would like to mention that some of the statements that we will be making during this con call are based on our assessment of the matter, and we believe that these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. Since this is a quarterly result review, please restrict your questions to the quarter 1 results. I now request our Director Finance, Mr. VRK Gupta, who is leading the BPCL team for this call to make his opening remarks. Thank you, and over to you, sir.</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Good morning, everyone. Welcome to the Post Quarter 1 Results Con Call. Thank you for joining us today. I hope you were able to go through our results for the quarter. During our last con call in May '24, we were in the midst of general elections. Since then, the elections are over now and the new government has been formed, and there is continuing focus on net-zero emission and gas-based economy.</p>
<p>Further, potential RBI rate cut, above normal rainfall during monsoon, anticipated infrastructure spending are expected to provide medium-term growth impetus. As per different agencies forecast, Indian economy is likely to grow by 6.6% to 7.8% in FY '25 and continues to be the world's fastest growing major economy.</p>
<p>On inflation front, India's inflation inched up to 5.1% year-on-year in June '24, driven by rise in food prices. During April, June '24, it averaged at 4.9% year-on-year. However, improved private consumption in rural supported by a normalized monsoon and increased Kharif sowing is expected to boost agricultural output and ease food inflation to enhance spending in rural pockets.</p>
<p>Crude prices are stabilized around USD85 per barrel and are likely to remain range bound between USD80 to USD90 barrel range as the quarter usually witnesses seasonal demand uptick on account of US driving season. Consumption of petroleum products in India has shown resilient growth in the first quarter with an overall growth of 5.5%. Major products such as petrol, diesel, ATF have grown by 7%, 1.6% and 11.4%, respectively.</p>
<p>BPCL registered a growth of 6.3% in MS, whereas HSD had a degrowth of 0.32% year-on-year. We expect petrol and diesel to grow in the coming years. The annualized growth in petrol is expected to be around 5% whereas in diesel, about 1.5% to 2% in the near future.</p>
<p>Performance in Q1 '24-'25. Our refineries continued with stellar performance during this quarter, and we have achieved a throughput of 10.11 MMTPA that almost 116% of the nameplate capacity. Our distillate yield was 84.57% during this quarter, which is one of the highest among Indian refineries. This quarter evidenced a significant fall in international product cracks as compared to previous quarter. Despite this, our refineries recorded a GRM of $7.86 per barrel in the quarter at a premium to Singapore GRMs.</p>
<p>We had announced two new petrochemical projects during the last year. We are happy to share that the licensors and PMCs for all petrochemical units have been onboarded. Further site grading and groundbreaking activities have commenced at Bina Petrochemical Project.</p>
<p>On the marketing side, our domestic market shares grew at about 3.2% year-on-year during the quarter to 13.16 million metric tons. We continue to generate the highest throughput per retail outlet amongst our peers with a throughput of 163 KL per month vis-a-vis 149 KL per month PSU average, driven by access to strategic markets and strong network along highways. We commissioned about 170-plus new retail outlets during this quarter and plan to take our total network to 23,000 by year-end.</p>
<p>Aviation business achieved a growth of 15% during the quarter against PSUs industry growth of 7% with an all-time high market share of 26.9% among PSUs. We have operationalized 25 of 26 GAs with BPCL, except the recently acquired Jammu and Kashmir and Ladakh GAs. BPCL along with Oil India as a consortium partner has received the LOI for Arunachal Pradesh, making it our seventh JV in CNG business. We have added 41 CNG retail outlets in Q1 '25 taking the total count to 2,075 stations and plan to add another 300-plus out in '25.</p>
<p>We have an installed capacity of 77 megawatts of renewable energy and further 176-megawatt capacity with both wind and solar is under construction. We have achieved highest ever 14.13% ethanol blending during this quarter. Our 200 KLPD 1G plus 2G Bioethanol plant at Bargarh in Orissa is nearing completion and we are targeting to start commencing activities soon. BPCL is evaluating to create joint ventures in establishing CGD plants with potential players and to create renewable energy assets across India. In terms of sustainable aviation fuel, Government of India has given an indicative branding target to blend 1%, 2% and 5% of SAF in international aviation sector with effective from '27, '28, and '30, respectively. Currently, there is no SAF plant commercially available in India. BPCL is conducting a market engagement study through consultant to assess feedstock availability for SAF production in India.</p>
<p>We are pleased to share that BPCL's MAK Lubricants campaign during Cricket T20 World Cup broadcast has significantly boosted our brand awareness and brand recall. Additionally, introducing the brand ambassador for our premium fuel speed during the T20 World Cup has further strengthened our brand presence. Moreover, BPCL associating with the Indian Olympic Association becoming the first PSU as the principal sponsor of the Indian Olympic contingent underscores our commitment to supporting national sports and socially responsible organization, driving long-term growth and value.</p>
<p>Without further ado, let me guide you through the financial highlights. The revenue from operations stood at INR1,28,103 crores. The profit after tax stood at INR3,015 crores. Against an estimated capital expenditure for this year of INR16,400 crores, we have spent about INR2,438 crores during this quarter. Our standalone net worth as on 31st March '24 is INR78,054 crores. The earnings per share for the quarter is INR7.06 per share.</p>
<p>As of June '24, we are at fairly low levels of debt. The debt equity at standalone gross borrowing level is 0.19. Overall, standalone gross borrowings is INR15,210 crores as on 30th June 24. Against these borrowings, we have current investments including oil bonds of similar levels around INR15,235 crores. At group level, debt equity is at 0.54 with gross borrowings of INR42,217 crores. This concludes my comments. And we will be happy to take your questions now. Thank you.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Yogesh Patil from Dolat Capital.</p>
<h3 class=""underline_top"">Yogesh Patil:</h3>
<p>My question is related to buffer account for the domestic LPG. Sir, you have reported a negative amount by the end of this quarter. And even in the current scenario, you are still losing some money on the sale of domestic LPG. Is there any clause related to buffer account that government will reimburse the under recovery if the buffer account remains negative for 6 months, 12 months, 9 months down the line. That's one thing. And again, we wanted to understand when government can give or consider this amount for the reimbursement? Any thoughts on this side?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>First of all, let me clarify, LPG is still a controlled product. The pricing being decided by the Government of India. Today, during this quarter, the sale price is less than the cost price. So as per the current compensation mechanism, there is no budgetary support as of date, they have announced. So since there is no budgetary support announced whatever be the incurrence in terms of losses on account of sale of LPG to domestic customers that is what we have taken hit to the P&L. And this will continue even subsequent months also. We are awaiting some sort of compensation mechanism by the Government of India. So once we get the compensation mechanism from the government of India, accordingly, we'll recognize that credit into the P&L.</p>
<h3 class=""underline_top"">Yogesh Patil:</h3>
<p>Do you expect the upcoming budgetary report at 23rd July, any kind of support?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We cannot comment anything because this is what government pricing. So what point of time government will announce the budgetary support, we are not clear at this point of time.</p>
<h3 class=""underline_top"">Yogesh Patil:</h3>
<p>Okay. Sir, my second question was related to Russian crude. What was the share of Russian crude BPCL processed during the quarter?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>39% of our entire throughput is from Russian crude during this quarter.</p>
<h3 class=""underline_top"">Yogesh Patil:</h3>
<p>Okay. And one more thing regarding, we also want to know directionally the discounts on the Russian crudes were lower compared to the previous quarter. And is that impacted on the GRM to some extent during the quarter?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Compared to year-on-year quarter, significant reduction of discounts have happened. But on a sequential basis, Q4 of last year and Q1 of current year, the trend is similar levels only, $3.5 to $4 discount level. But previous year if you compare it the crude discounts are significantly on the lower side.</p>
<h3 class=""underline_top"">Yogesh Patil:</h3>
<p>Sir, we also read about the Andhra based new refining unit and petrochemical unit, which will be set up by the BPCL. Can you please elaborate on the same? And if possible, can you share some capex during the quarter? What was the capex during the quarter? And what is the guidance for FY '25?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes. Only on the refining side, if you see, today we are almost marketing our products around 53 -- 52.5 MMT of estimated sales for this year. Every year, we are purchasing from the private refineries around 5, 5.2 MMT of products, around 2 MMT from the Numaligarh Refinery 15 years rights we have the marketing rights. And around 3, 3.2 MMT we are purchasing from other standalone refineries. So we are short in terms of products compared to our refining capacity and our market share already there is a gap of around 5.5 million metric ton.</p>
<p>And even if we say a 3%, 4% year-on-year growth, this gap will continue for a bigger amount. So that is the reason we are exploring to create some new refining capacity. Some quantity from the existing refineries we take 3 or 4 MMT extra refining capacity. And we are exploring a new refining either in the East Coast or other places, just we are exploring. We've not yet concluded which location we have to go for a new refining expansion and what is the configuration, we are still studying. So once the configuration studies are over, then we can communicate what would be the capex size and what would be the refining capacity and what is the location until we are evaluating that.</p>
<p>And in terms of the capex for the current year guidance, we have an estimated capex of around INR16,400 crores during this year. Already, we have spent around INR2,600 crores during this quarter.</p>
<h3 class=""underline_top"">Yogesh Patil:</h3>
<p>Okay. Sir, if possible, can you share the total consolidated debt by the end of quarter 1 and cash position?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Consolidated that is around INR42,700 crores consolidated group level, and we have the surplus cash around INR15,000 crores.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>We will take the next question from the line of Mayank Maheshwari from Morgan Stanley.</p>
<h3 class=""underline_top"">Mayank Maheshwari:</h3>
<p>Two questions from my end. First was more on market share. I think especially on an overall basis, you have grown a bit slower this quarter compared to the industry growth. So can you just comment in terms of how you are trying to defend your position considering the impact of private player's demand -- competition that's coming through? Any things that you're seeing there that you can kind of help us out?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes. This quarter, yes, I agree, we have grown at 3.2% compared to industry where we are not better than industry. There are 2 reasons, compared to previous year because when the crude prices are higher and we have not passed on the burden to the customers, the private sector volumes have come to public sector last year. Whereas current year since the pricing has improved, moderated and the under-recoveries have come down, the private sector is taking back the normal volume. That is the reason diesel we are not growing; diesel has a little bit of degrowth. However, MS we are doing good and in MS we have a good amount of growth.</p>
<h3 class=""underline_top"">Mayank Maheshwari:</h3>
<p>So you think your diesel market share comes back to you? Or do you think this will be a new normal that you kind of expect now?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We are expecting in the coming quarters we’ll become positive in diesel growth. Current quarter, there is negative growth, but we are expecting this trend will reverse.</p>
<h3 class=""underline_top"">Mayank Maheshwari:</h3>
<p>And sir, the second question is more related to industrial products and margins there. Have you seen some impact on margins in the last quarter because of competition even on the industrial side?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>No. Competition is there, even earlier year also, not that this competition has come new in industrial segment. So we are not foreseeing any squeezing of margins in the industrial segment. Similar levels of margins should continue.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>We'll take the next question from the line of Sumeet Rohra from Marks & Capital.</p>
<h3 class=""underline_top"">Sumeet Rohra:</h3>
<p>Thank you very much for doing this on a Saturday. Sir, my question more is on the LPG front, so as you mentioned that LPG is a controlled product by the Government of India. So, sir, can you first quantify what's the amount of LPG under recovery you have taken in this quarter? Is it INR2,900 crores? Am I right on that?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>The LPG impact during this quarter is around INR2,300 crores because we had a positive buffer of INR280 crores at the beginning of the year. And in the current year, the positive buffer becomes a negative buffer of INR2,015 crores. That means the net impact during this quarter is around INR2,300 crores on account of LPG. So currently, even if you take the current Saudi CP prices of around $570 per metric ton, we are expecting around INR600 crores per month as the LPG impact.</p>
<h3 class=""underline_top"">Sumeet Rohra:</h3>
<p>Understand. But sir, now — I mean, as a matter of fact, my question to you is more as an investor rather than anything else. How do we look at it? Because since it is a controlled product, it is obviously going to be compensated to you as it has always been in the past. So assuming that it's done, would you reverse it immediately in this quarter? I mean, is the understanding correct? Or would you...</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, whenever the compensation mechanism clarity comes from the Government of India, immediately we take that to P&L credit.</p>
<h3 class=""underline_top"">Sumeet Rohra:</h3>
<p>Okay. And sir, secondly, I mean, on the pricing point of view, is there — I mean, the matter of fact is that now crude is very well in the range between USD 80 and USD 90 as you highlighted. But are there any thoughts on the pricing mechanism or something of that sort?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>No, no, such conversations are happening now. The crude is hovering at around $85. So as long as $80 to $85, we are comfortable with the current pricing.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>The next question is from the line of Sabri Hazarika from Emkay Global.</p>
<h3 class=""underline_top"">Sabri Hazarika:</h3>
<p>Yes. I have three questions. So first one is on this LPG losses only. So, I think, a couple of years back also you got around INR22,000 crores that was given as a onetime settlement. So who basically goes for this? Is it you or is it MOP&NG who goes to the Finance Ministry? What is the run-up to this declaration of onetime compensation for loss in LPG?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>No. You see that this is actually price movements. If the Saudi CP goes on a higher side, then we start incurring the losses. This quarter it is around INR2,300 crores. We are awaiting some sort of government support. I'm not sure when that support will come — either this quarter or subsequent quarters. We are awaiting the confirmation from the Government of India only on what subsidy mechanism we'll get.</p>
<h3 class=""underline_top"">Sabri Hazarika:</h3>
<p>Is it now with the Finance Ministry this request? Or is it just with…</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>It will be routed through our Ministry, the parent ministry, to the Finance Ministry.</p>
<h3 class=""underline_top"">Sabri Hazarika:</h3>
<p>Finance Ministry, okay. Secondly, marketing inventory gains have been reported around INR400 crores. So can you give some color — I mean, last year there has been some price drop on this, so how has this come from?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>This marketing inventory generally we calculate because RTPs are changing on a fortnight-to-fortnight basis. So whatever inventory levels we have at the marketing locations, the differential between the price between the fortnights, and we calculate what is the inventory gain.</p>
<h3 class=""underline_top"">Sabri Hazarika:</h3>
<p>Okay. So it is more to do with RTP rather than retail pricing, is that right?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>No, no. RTP. Right. Nothing to do with the retail selling price. It is only RTP.</p>
<h3 class=""underline_top"">Sabri Hazarika:</h3>
<p>So whenever there's an excise cut that also affects the RTP rather than retail pricing, is that right?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Right. Whenever excise cut or excise changes happen, it will have an impact on inventory gain also.</p>
<h3 class=""underline_top"">Sabri Hazarika:</h3>
<p>And sir, last question, how many retail outlets you have added in Q1? You said 23,000 is the target for the year?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>171. During this quarter, 170.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>We'll take the next question from the line of Kirtan Mehta from BOB Capital Markets.</p>
<h3 class=""underline_top"">Kirtan Mehta:</h3>
<p>In terms of the additional refining capacity that we are looking at either of the 2 locations, you have previously stated that you would like to grow the refining capacity to 45 million tons. So is this new refining within the 45 million-ton capacity target? Or are we looking to extend the refining beyond that?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>The announced plans of 45 MMT are from the existing refineries. So what we are looking at is much beyond 45 MMT because our market share itself is — this year we are estimating around 52 MMT, and we are purchasing around 5 MMT of products from private refineries. And if the growth is around 4% or 5% year-on-year, by 2030 we'll have a shortage of good amount of refining capacity. So that is the reason we are exploring additional capacity of refinery beyond 45 MMT.</p>
<h3 class=""underline_top"">Kirtan Mehta:</h3>
<p>Understood. In terms of the NRL, when it gets expanded, will we still have the right to market NRL products as well? So that would still remain our capacity, and it will not necessarily be a shortfall?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Existing agreement is for the existing capacity. We have not signed any MOU for the additional capacity. We have the marketing rights, but we have not yet signed any additional capacity MOU.</p>
<h3 class=""underline_top"">Kirtan Mehta:</h3>
<p>And would this capacity be of the order of 10 million tons? What would be the typical size that we will be looking at here?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We have not yet concluded — maybe a 9 MMT train or 12 MMT train, whichever is commercially more viable. Accordingly, we have to take a call. Still, we are exploring what would be the best configuration and what product portfolio we should take. We are still studying this.</p>
<h3 class=""underline_top"">Kirtan Mehta:</h3>
<p>Sure, sir. And on the E&P side, could you update us on the status of Mozambique as well as the Brazil block?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Mozambique — still force majeure is continuing. But the security situation has improved a lot compared to the previous quarter. We are expecting maybe in another one quarter, there may be some good developments — that is what we feel.</p>
<p>Secondly, the existing vendors or contracts are in place. Project financing discussions are happening with the lenders. Maybe we have to wait for one more quarter and see when they declare the upliftment of the force majeure.</p>
<p>And second — for Brazil, the development plan has been submitted to the E&P. We are yet to receive approval from the E&P. Once that approval comes, then automatically our development program will continue.</p>
<h3 class=""underline_top"">Kirtan Mehta:</h3>
<p>In Brazil, this is related to BM-SEAL-11 block, correct?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, SEAL-11 block.</p>
<h3 class=""underline_top"">Kirtan Mehta:</h3>
<p>And in terms of Mozambique, do we have any idea about the cost escalations that may happen with this delayed project?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Earlier project cost was $15.5 billion. Some indicative numbers they've shared — it may be around $19 billion. That means around $3.5 billion to $4 billion increase in project cost. So we are expecting around $19.5 billion to $20 billion project cost.</p>
<h3 class=""underline_top"">Kirtan Mehta:</h3>
<p>And is there any way we can sort of maintain the IRR on this project, or this will translate into corresponding deduction in the IRR value?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>IRR definitely — because the project cost is going up, though the sale contracts are intact. So definitely, there will be an impact on IRR. But going forward, still the IRRs are commercially viable.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>The next question is from the line of Maulik Patel from Equirus Securities. Please go ahead. As the current participant has left the queue, we will move on to the next question from the line of Roshani from Argum Group.</p>
<h3 class=""underline_top"">Roshani:</h3>
<p>Do you have any turnaround plans this year for any of the refineries?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We have both Kochi Refinery and Bina Refinery. For Bina, around 15 days turnaround is planned. And Kochi will have multiple units — 30 days and 15 days, so 45 days turnaround planned during this year. The turnaround will start in September to October, and Bina will be August to September.</p>
<h3 class=""underline_top"">Roshani:</h3>
<p>Okay. Any plans for the Mumbai refinery then?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>No planned shutdowns.</p>
<h3 class=""underline_top"">Roshani:</h3>
<p>Okay. Which section units of Kochi and Bina — any light on that?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Kochi will be CDU-II, FCCU block — majority of the units are going for shutdown.</p>
<h3 class=""underline_top"">Roshani:</h3>
<p>Okay. Bina?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Bina — HCU, DHT, HGU, SRU — all four major units. For 15 days we are planning a shutdown.</p>
<h3 class=""underline_top"">Roshani:</h3>
<p>And sir, in terms of the — are there any term deals being discussed with Russia? Are you exploring on that side?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We are exploring. Discussions are continuing, but nothing has concluded for Russian term deals. But anyhow, we are getting sufficient crude from the spot market. Still, the term deal discussions are going on — we've not yet concluded anything.</p>
<h3 class=""underline_top"">Roshani:</h3>
<p>So right now, all the deals are on spot basis, right?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Right. Spot basis.</p>
<h3 class=""underline_top"">Roshani:</h3>
<p>Okay. So are spot deals — the discounts are better on spot than the term ones?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Similar levels only. Term deals give product security. Otherwise, discount levels are similar.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>The next question is from the line of Maulik Patel from Equirus Securities. Please go ahead.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Sorry to interrupt, sir. Your voice is breaking. We can't hear you clearly. Sir, may I request you to kindly use your handset?</p>
<h3 class=""underline_top"">Maulik Patel:</h3>
<p>Yes, I'm using the handset only.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Sir, there is a network issue on your line. We are not able to hear you clearly. Can you please rejoin the queue?</p>
<h3 class=""underline_top"">Maulik Patel:</h3>
<p>Sure.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>We'll take the next question from S. Ramesh from Nirmal Bang Institutional Equities.</p>
<h3 class=""underline_top"">S. Ramesh:</h3>
<p>So if you look at the Bina refinery expansion plan, when do you see the refinery expansion to be completed?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Our project scheduled completion will be FY '28–'29. May '28 is our target date for refining expansion and the refining-to-petrochemical expansion. So we are expecting commissioning during FY '28–'29.</p>
<h3 class=""underline_top"">S. Ramesh:</h3>
<p>Okay. Now on the CGD business in the commercialized GAs, can you give us the year-to-date capex, what capex you're planning this year, and when you see visibility on revenue and EBITDA from the commercialized GAs on a standalone basis?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>On a standalone basis, we have 26 GAs where we have exclusive licenses. Out of 26, operations have already started in 25 GAs. During this quarter, almost 28 TMTPA of CNG sales has happened from these GAs.</p>
<p>For this year, we have spent around INR 316 crores as CGD capex. The current year capex target for the CGD business is around INR 2,800 crores to INR 3,000 crores.</p>
<h3 class=""underline_top"">S. Ramesh:</h3>
<p>And what is the aggregate capex you've incurred to date on CGD?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Aggregate CGD capex is around INR 5,857 crores across the 25 GAs where work has commenced.</p>
<h3 class=""underline_top"">S. Ramesh:</h3>
<p>So when do you see the commercial impact on the P&L in terms of revenue and EBITDA from the standalone GAs?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Our target for CGD expansion over the next 5 years is around INR 25,000 crores of capital allocation. Volumes have already started coming from CNG and the bulk business. We are expecting significant volume growth from FY '26–'27 onwards. Initial volumes as per plan have already begun.</p>
<h3 class=""underline_top"">S. Ramesh:</h3>
<p>Okay. Now my last thought — on the consolidated results in other matters under 6A, there is a mention of total loss after tax of INR 490 crores, which I presume is for Bharat PetroResources. So would it have any cash flow impact? And does it need any additional funding support from BPCL for Bharat PetroResources?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Bharat PetroResources — the major two blocks are Mozambique and Brazil. For both blocks, the equity infusion will continue because as per the project plan, we need to increase a certain quantum of equity. And as of date, BPRL has no cash-generating blocks. So whatever funds are required for Mozambique and Brazil, either through project financing or equity route, will have to be arranged.</p>
<p>The reason for the INR 490 crore expenditure this year is that the Mozambique project is under force majeure. Since it is in force majeure, the borrowing cost cannot be capitalized — everything has to be taken to the P&L. That is why there is a loss of around INR 490 crores in BPRL. And yes, there will definitely be an increase in equity once the project restarts and development work in Brazil progresses.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. We'll take the next question from Saket Kapoor from Kapoor Company. Please go ahead.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Firstly, if you could articulate the reasons for lower cracks for the current quarter, and post the exit of June, how are the cracks behaving for the month of July?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes. During this quarter, cracks are subdued. Spreads are on the lower side compared to previous quarters. There are two reasons — inventory levels of gasoline and gas oil are on the higher side. And we are expecting demand to pick up once the U.S. driving season comes. Already, cracks have started picking up. Even July and August forward spreads have improved compared to earlier months.</p>
<p>Once the U.S. driving season progresses, inventory levels should come down, and we expect gasoline and gas oil cracks to be much better by Q3.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>So post June, what are the current cracks for gasoline and diesel?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We are looking at around $8 for gasoline and $15 for gas oil.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Okay. And what was the average for the June quarter?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>During this quarter, gasoline averaged $8.58 (April to June) and gas oil averaged $14.76. Both are slightly improved — around $1 — from the last year's corresponding quarter.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>And on the capex front, what has been allocated in terms of our E&P activity? And also, for the pipe segment — seamless pipes and other materials required in drilling and E&P — what is outlined for the current year in terms of casing pipes and similar requirements?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes. For the current year, we've estimated a capex of around INR 16,400 crores. Out of this, the major investment for refinery and petrochemicals is around INR 4,300 crores. For the exploration side, we are planning an equity increase of around INR 2,250 crores for exploration activities. For marketing — mainly pipeline expansion and infrastructure creation at marketing locations — the total capex allocation will be around INR 7,100 crores. And for CGD, we are allocating around INR 2,000 crores.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Right. And lastly, on the lubricant part, sir, what is our current market share? And what was our volume for this quarter?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>That we will share separately — lubricants.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>We can look forward, sir, to investor presentations. I think if I’m not mistaken, we are coming up with our numbers, but the press release and investor presentations do not form part of our results. So can we look forward to these two also being included along with the continuity of the con call?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, we will look at it. We will look at it.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. The next question is from the line of Gagan Dixit, Elara Securities. Please go ahead.</p>
<h3 class=""underline_top"">Gagan Dixit:</h3>
<p>Sir, my question is regarding this new refinery plan. What are the key criteria that you look for when setting up a refinery? Is demand the main reason? Or are you also looking for advantages on the petrochemical side? What are the main ideas you are evaluating for this new refinery?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes. Both aspects are being considered. In fact, our corporate strategy aims to increase our petrochemicals portfolio — currently less than 1%. After the Bina expansion and petrochemicals project, we plan to take our petrochemicals share to 6%–7%, and in the long term, we want petrochemicals to form at least 15% of our product sales. That is one key criterion.</p>
<p>Second, we have a market share of around 50–53 MMT of product sales, but we do not have sufficient refining capacity at this point. India’s energy demand is growing at 5%–6%. If this growth continues for the next 4–5 years, BPCL will have a significant refining shortfall. So keeping both these factors in mind, we want to add new refining capacities with stronger petrochemical configurations. That is broadly what we are evaluating.</p>
<h3 class=""underline_top"">Gagan Dixit:</h3>
<p>And sir, as far as I know, long back BPCL had purchased some land around two decades ago in Allahabad. Is that land still available if you want to set up a refinery there?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, the land is still in the name of BPCL. There are small encroachments that have happened, but we are addressing those. The land at Allahabad is still with BPCL.</p>
<h3 class=""underline_top"">Gagan Dixit:</h3>
<p>Okay. So that can handle that 10 million ton refinery also if you want, I mean?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, yes, it can handle. It can handle a 9 MMT train or a 12 MMT train — that land parcel can support it.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. The next question is from the line of Sumit Rohra from Marks & Capital. Please go ahead.</p>
<h3 class=""underline_top"">Sumit Rohra:</h3>
<p>Sir, I just wanted to get a sense on profitability, because in this con call of nearly 1 hour, we spent nearly 15 minutes on capex, which is actually a burden to our shareholders. So can you talk a bit on profitability?</p>
<p>I understand that for this quarter, we have reported a profit of about INR 3,000 crores after absorption of the LPG figure of INR 2,300 crores, plus we had an INR 400 crores inventory gain. So technically, you reported about INR 4,800 crores of profit in this quarter, which is absolutely astounding and good.</p>
<p>So sir, I want to pick your brains on this — do you see this profit sustaining?</p>
<p>Secondly, you have something called Project Aspire, wherein you are looking to double profitability as well. So can you please talk a little bit about Project Aspire on profitability? And how do you see the next few years shaping up in terms of PAT, sir?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Thank you. You have rightly observed our profitability. Whatever you said is correct — this is the normalized profit. If you remove the LPG under-recovery and inventory gain, we are somewhere around INR 4,800 crores or INR 4,700 crores profit generation during this quarter.</p>
<p>A couple of things: refining margins are still at a good level. Even compared to a 10-year average GRM, the current quarter's GRMs are better. And we expect the cracks to continue for a longer period of time. Even if in the short term cracks are lower, within the next couple of quarters, cracks will improve.</p>
<p>We are looking at similar levels of refining margins. And if crude stays in the $80–$85 range, we are in a comfortable position in terms of profitability and in terms of supporting the capex programs we have announced.</p>
<p>Regarding Project Aspire, yes, our aspiration is to double the profits from the normalized profit of around INR 12,000–13,000 crores. We are aspiring to take it at least 2x. That is why we have announced major large projects in refining expansion and petrochemicals. By FY '28–'29, once all these projects are commissioned, we expect a good amount of growth in profitability.</p>
<h3 class=""underline_top"">Sumit Rohra:</h3>
<p>Sir, I have just one very humble suggestion in the best interests of our company. Henceforth, if we can spend a bit more time on profitability as well, it will inspire and give confidence to our stakeholders about where we are headed. Because it is very difficult to digest numbers for a company selling so many products across so many verticals.</p>
<p>So as we talk about capex, talking about profitability will also help in a big way and will restore confidence among stakeholders. That’s something that came to mind, so I thought I’d bring it to your attention.</p>
<p>And wish you all the very best. I sincerely hope that you can deliver on this INR 20,000 crores profit, which your company deserves.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. We'll take the next question from the line of Vipulkumar Anopchand Shah from Sumangal Investments. Please go ahead.</p>
<h3 class=""underline_top"">Vipulkumar Shah:</h3>
<p>So my question is, what is our cumulative investment till date in BPRL?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>BPRL — our total investment as of date, we have committed around INR 37,000 crores in BPRL. Majority of the investment is through borrowings. We have invested in equity of around INR 10,700 crores and the balance is through borrowings. Total commitment in exploration till date is INR 39,358 crores as of June '24.</p>
<h3 class=""underline_top"">Vipulkumar Shah:</h3>
<p>39?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>39.</p>
<h3 class=""underline_top"">Vipulkumar Shah:</h3>
<p>Okay. And sir, one small suggestion — if you can make the handout and investor presentation a part of your results, it will be very helpful, sir.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. The next question is from the line of Somaiya V from Avendus Spark. Please go ahead.</p>
<h3 class=""underline_top"">Somaiya V:</h3>
<p>Sir, on the Bina expansion, can you just help us with the timeline or milestones that we are looking at over the next 2–3 years? And for the current year capex that you mentioned for refining, how much of that is going towards Bina? Also, over the next 1 or 2 years, how do we plan to spend on capex progress for this project?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>For Bina, the total project cost is INR 49,000 crores. It has two components: refining expansion and petrochemicals — it is an integrated project.</p>
<p>For the current year, financial progress may not be much because we are estimating around INR 2,000 crores of capex for Bina. But on physical activities, the major milestones — selection of licensor and selection of PMC — are almost completed. That is the biggest milestone as per schedule.</p>
<p>Second, field works such as ground leveling, roads, and internal infrastructure have already been awarded to contractors, and work has started. The actual capex for this project happens from year 3 onwards.</p>
<p>So for year 1 (current year), we expect around INR 2,000 crores. Next year will be around INR 7,000–8,000 crores. But year 3 will have the major capex. As per the project schedule, commissioning is planned for FY '28–'29.</p>
<h3 class=""underline_top"">Somaiya V:</h3>
<p>So at the company level, what would be your capex run rate? This year you mentioned INR 16,500 crores. Considering Bina's expansion requirement, how would it look in year 3?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We will share that 5-year breakup separately.</p>
<h3 class=""underline_top"">Somaiya V:</h3>
<p>Okay sir. Also, this year you mentioned INR 7,100 crores capex for marketing. In terms of station additions, can you give some granularity on how you see this?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes. Marketing infrastructure mainly has 4–5 components. First, we have a large pipeline network — we are expanding product pipelines, including Krishnapatnam–Hyderabad, Irumpanam, and Irugur–Devangonthi pipelines. We also have certain projects at Rasayani for LPG import terminal and infrastructure tankage creation.</p>
<p>From the retail outlet perspective, we are planning around 1,300 outlets this year and 300 CGD stations. This includes a combination of infrastructure creation and marketing location expansion, along with EV charging stations — around 3,500 stations we aim to create this year. With these initiatives, the estimated capex for marketing is around INR 7,000 crores.</p>
<h3 class=""underline_top"">Somaiya V:</h3>
<p>Sir, on the refining front, in terms of Russian crude sourcing — currently at 39% — is this the maximum our refineries can take, or is there headroom for increase?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>There may be 1–2% more headroom, so 40–41% could be taken. On average, 39–40% is the practical processing limit. Technically, we prefer to restrict it at this level.</p>
<h3 class=""underline_top"">Somaiya V:</h3>
<p>Also, in terms of Middle East crude sourcing premiums or discounts, how has the trend been in the last few months?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>At the beginning of this year, if you compare April–May, the OSPs have moderated. They are expected to moderate further since cracks are low. So premiums are unlikely to increase when cracks are on the lower side.</p>
<h3 class=""underline_top"">Somaiya V:</h3>
<p>Any recent impact due to freight costs going up? Any effect on sourcing costs?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Slightly better. Compared to the previous year, freight rates are relatively lower now. Initially, due to Russia–Ukraine issues, freights were higher, but currently most Russian cargoes are delivered on a delivered basis. So, freight has minimal impact on us.</p>
<h3 class=""underline_top"">Somaiya V:</h3>
<p>Thank you.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. We'll take the next question from Saket Kapoor from Kapoor Company. Please go ahead.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Sir, for the Ethanol blending project, what have we outlined for the current financial year in terms of procurement? Also, there have been talks about laying separate pipelines to reduce transportation costs for ethanol. Could you give an update on this and our current year target?</p>
<h3 class=""underline_top"">Rahul Agrawal:</h3>
<p>Currently, we are blending about 14% ethanol, which is one of the highest. Last year, we blended around 12–12.5%. Our target is to achieve about 15% in the current quarter. The government has mandated around 20% from FY '25.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Sir, in terms of crude liters, can you mention how much we have ordered and procured in Q1, and what the plan is for the full year?</p>
<h3 class=""underline_top"">Rahul Agrawal:</h3>
<p>Yes, we will share these numbers separately.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Sir, two questions are pending — for lubricants, you said you will share separately, and now for ethanol also. How will you share these separately?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Our team will circulate the details by e-mail.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Okay, but our emails are not registered with you. It would be better if this information is shared as a release on your website or through the exchanges so that it benefits investors at large, not just a few specific investors.</p>
<h3 class=""underline_top"">Rahul Agrawal:</h3>
<p>We will share it through Antique Global.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>So we will need to get in touch with them. Lastly, on procurement, in terms of crore liters, can you give an idea of last year’s total and Q1 numbers? Do you have these numbers with you?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We will share these numbers.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>For profitability, as mentioned by another investor, if you normalize the quarter, is the PBT number of INR 4,800 crores confirmed by management?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>You can take it around INR 4,600 crores after tax. If you remove LPG under-recovery and add back the INR 400 crores inventory gain, the normalized PBT would be around INR 4,500–4,600 crores.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>What would be the comparable number, sir?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Comparable for what exactly?</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Comparable quarter-on-quarter and also last year, taking similar parameters. What would the June ’23 like-to-like comparable numbers be?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We need to work this out. The LPG under-recovery and the positive/negative buffer at that point will need to be calculated separately.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>If you could summarize the questions and the unanswered parts during the call and work them out for the coming quarters, that would be very helpful for investors and analysts. This will ensure we get the right information during the call. I hope the team can be better prepared to handle this?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We'll look at it.</p>
<h3 class=""underline_top"">Saket Kapoor:</h3>
<p>Thank you.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. The next question is from the line of Vikas Jain from CLSA. Please go ahead.</p>
<h3 class=""underline_top"">Vikas Jain:</h3>
<p>Just one question. Why are we adjusting the LPG under-recovery since that is not part of the income statement? We are using normalized margins to get to our reported profit, right? That's part of the buffer. So if we take the losses into account in the old accounting method where losses were part of the base income statement, then profits would be lower by around INR 2,800 crores, correct?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>LPG is still a regulated product, and its pricing is decided by the Government of India. We have disclosed the negative buffer for LPG. After absorbing these losses, we have around INR 3,015 crores of profit after tax for this quarter. There are different ways to calculate normalized profit. If there were no LPG under-recovery, that would be one way to calculate normalized profit. Otherwise, the LPG losses observed are taken by the company, as there is no compensation mechanism.</p>
<h3 class=""underline_top"">Vikas Jain:</h3>
<p>Sir, I am not clear about the buffer account. Has the LPG loss become part of your marketing profits as reported, or is it kept out of the income statement as a receivable, which you will take in the future?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>To clarify, if there is no compensation mechanism, LPG losses are taken into the P&L, which reduces margins for that sale. If there is any over-recovery, we create a buffer and show it as a payable without recognizing any income. But for LPG losses, we do not create a recoverable; the hit is directly in the P&L.</p>
<h3 class=""underline_top"">Vikas Jain:</h3>
<p>Thank you so much.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. The next question is from Vivekanand Subarraman from Ambit Capital. Please go ahead.</p>
<h3 class=""underline_top"">Vivekanand Subarraman:</h3>
<p>Just one simple question. The sequential change of around INR 750–800 crores in oil bonds — what was this on account of? Can you explain?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, we have started because we had some cash surplus available during this quarter. For overnight borrowings, certain G-Sec investments need to be hypothecated. In this context, we acquired additional G-Sec investments from the market during this quarter.</p>
<h3 class=""underline_top"">Vivekanand Subarraman:</h3>
<p>Okay, sorry, for overnight borrowings, you have to…</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>We had to split certain investments. Since we had cash surplus, we started investing in G-Secs and oil bonds. That is why incremental oil bonds have gone up.</p>
<h3 class=""underline_top"">Management:</h3>
<p>They are not oil bonds. They are government securities.</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, G-Secs, government securities, and oil bonds all put together.</p>
<h3 class=""underline_top"">Vivekanand Subarraman:</h3>
<p>Okay. Were these issued fresh by the government, or were you purchasing them?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>These were purchased from the market.</p>
<h3 class=""underline_top"">Vivekanand Subarraman:</h3>
<p>Okay, so it is like treasury operations?</p>
<h3 class=""underline_top"">V.R.K Gupta:</h3>
<p>Yes, it is purely treasury operations and cash management.</p>
<h3 class=""underline_top"">Vivekanand Subarraman:</h3>
<p>Thank you.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. Varatharajan Sivasankaran for closing comments. Over to you, sir.</p>
<h3 class=""underline_top"">Varatharajan S.:</h3>
<p>Thank you, Michelle. I wish to thank all the participants and the management of BPCL for taking the time to join this call and discuss all the issues. Thanks, everyone. Have a nice day.</p>
<h3 class=""underline_top"">Moderator:</h3>
<p>Thank you, members of the management. On behalf of Antique Stock Broking, this concludes the conference. Thank you for joining us, and you may now disconnect your lines.</p>
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