Conference Call Recording and Transcript

<h3 class="underline_top">Moderator:</h3> <p>Ladies and gentlemen, good day, and welcome to Bharat Petroleum Corporation Limited Q2 FY27 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 star then zero on your touchstone phone. Please note, this conference is being recorded.</p> <p>I now hand the conference over to Mr. Varatharajan. Thank you, and over to you, sir.</p> <h3 class="underline_top">Varatharajan Sivasanka:</h3> <p>Thank you, Naznin. Very good morning, ladies and gentlemen. It&#39;s my pleasure to welcome all the participants on the call and the BPCL management to the 2Q FY27 call of BPCL. We have with us Mr. V.R.K. Gupta, Director of Finance; Mr. Pankaj Kumar, ED, Corporate Finance; Mr. Ashish Goyal, CGM, Corporate Treasury; Ms. Anuya Vatsal Thakar, DGM Finance; Mr. Balagirish, Senior Manager, Finance, Bharat Petroleum Corporation.</p> <p>I would like to hand over to Mr. Balagirish for a disclaimer.</p> <h3 class="underline_top">Balagirish:</h3> <p>Thank you, Mr. Varatharajan. Good morning, and on behalf of the BPCL team, I welcome you all to the post Q2 results con call. Before we begin, I would like to mention that some of the statements that you would be making during this con call are based on our assessment of the matter, and we believe that these statements are reasonable.</p> <p>However, they involve a number of risks and uncertainties that may lead to different results. Since this is a quarterly result review, please restrict your questions for the Q2 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, and thank you for joining us today. As you are aware, our quarter 2 results were announced on Friday. Let me begin by putting the quarter in context, particularly how the operating environment evolved since we last spoke. When we met in July, the energy markets were under significant stress due to the escalation of the West Asia crisis, which had a considerable impact on our quarter 1 performance.</p> <p>As tensions showed some signs of easing at the time, we were hopeful that the operating environment would gradually stabilize. However, quarter 2 unfolded quite differently. The quarter began on a relatively calm note with Brent crude at around $70 per barrel from mid-July.</p> <p>However, geopolitical tension intensified, pushing crude prices above $90 per barrel by August. The situation escalated further in September following attacks on Saudi export infrastructure and tankers with Brent averaging around $116 per barrel during this month.</p> <p>Tensions around the Strait of Hormuz and the Red Sea also remained elevated. While we continue to secure supplies without disruption, the escalation kept crude premiums and freight costs at elevated levels. Against this challenging backdrop, strong diesel and ATF cracks supported refining economics, while lower LPG under recoveries provided some relief to marketing margin during the quarter.</p> <p>At the same time, the rupee remained under pressure, averaging around INR95.6 against U.S. dollar, adding to the cost of our dollar-denominated imports. Through all this volatility, our priorities remained clear. We stayed focused on our 4 things, securing supplies, serving our customers without disruption, protecting shareholder value and maintaining momentum on our growth program.</p> <p>Let me start with sourcing. Our spot crude share remained at around 67% in Q2, while Russian grades accounted for approximately 37% of our total crude procurement, both broadly in line with previous quarter.</p> <p>As flows from Middle East improved, we progressively restored sourcing from the region while retaining the flexibility and diversification we had built during Q1. I&#39;m also pleased to share that our efforts to strengthen our international crude sourcing capabilities have begun to yield results.</p> <p>BPCL became the first in the industry to leverage sourcing opportunities from inside the Strait of Hormuz at a price advantage. This was achieved through our international crude desk in Singapore, which commenced operations in September 2026.</p> <p>This marks an important step in strengthening our global sourcing capabilities and improving our ability to respond quickly to opportunities in an increasingly dynamic crude market. As of 30th September, we held around 22 days of crude inventory and importantly, our crude sourcing requirements are tied up through December 2026.</p> <p>Moving to LPG. Despite disruption to traditional supply routes, we maintained domestic availability through a more diversified import portfolio. Supplies from the Arab Gulf improved during the quarter, while U.S. origin cargoes accounted for around 48% of our total LPG imports in Q2.</p> <p>Currently, we are holding 32 days of LPG inventory, including in transit. On LNG, disruptions to our long-term supply contracts required us to actively diversify our sourcing. We secured alternate spot supplies from the U.S., Oman and West Africa, supported by flexible logistics arrangement to bridge supply gaps despite elevated market prices.</p> <p>Coming to refining. Our refineries continue to deliver a superlative operational performance during the quarter. We achieved a throughput of 10.4 million metric ton in Q2 with overall capacity utilization at 117%. Our gross refining margin stood at $32.53 per barrel. And after adjusting SAED, the GRM was around $14 per barrel. Distillate yield remained strong at 84.38%.</p> <p>Moving to marketing. Our domestic sales volume stood at 13.47 million metric ton in Q2 compared to 13.62 MMT in Q1. We continue to strengthen our retail network, taking the number of outlets to 25,592 compared with 25,485 at the end of Q1. At the same time, we continue to build our premium fuel and nonfuel portfolio.</p> <p>Speed 97 conversion stood at 5.21% during the quarter. Speed 100 is now available at 162 outlets, and our BeCafe network has expanded to 234 locations.</p> <p>On LPG, we commissioned our Matia LPG plant in Goalpara, Assam, our first LPG bottling plant in the state with a capacity of 30 TMT per annum. This is an important step towards strengthening our LPG infrastructure and product availability in the region. We are also pleased to share that our premium composite cylinder, Bharatgas Lite ZIP, is now available across India and can be conveniently booked through the Hello BPCL app.</p> <p>I&#39;m proud to share with you that BPCL has recently launched extreme weather grade diesel developed entirely in-house to keep military vehicles operating reliably in extreme winters and at high altitudes. The first rake was dispatched from Bina in August. For us, this is more than just a new product. It demonstrates what we can achieve when innovation and technological capabilities come together in support of national priorities.</p> <p>Our gas business maintained strong growth momentum. Bulk Gas achieved record H1 sales performance of 979 TMT, registering 53% year-on-year growth, while CGD sales reached 177 TMT, growing 65% year-on-year.</p> <p>The recently announced GOBARdhan scheme has made CBG projects increasingly attractive, and we are actively pursuing this opportunity through both our own plants and joint ventures. Additionally, our CBG blending reached 6.5% in H1, more than double the mandated target of 3%.</p> <p>Coming to LPG compensation, the softening of Saudi CP prices during Q2 provided some relief on under recoveries. Average under recovery declined to around INR290 per cylinder in Q2 compared to INR507 per cylinder in Q1.</p> <p>As of 30th September, the cumulative buffer stood at INR17,334 crores after adjusting for INR3,796 crores of compensation received during the first half. For future, we remain hopeful of the government&#39;s continued support to OMCs towards domestic LPG compensation.</p> <p>Let me now brief on our growth program. Our capex program remains on track. And since we last spoke, our key projects have continued to make steady progress. As of September &#39;26, our Bina Petrochemicals and refinery expansion project has reached 40.2% progress, while the polypropylene project at Kochi has reached 55%. The PRFCC project at Mumbai is also progressing.</p> <p>We have also taken an important step in our sustainable aviation fuel journey. In October, we signed India&#39;s first co-processing licensing agreement for our SAF project at Mumbai refinery. Phase 1 involves revamping the existing Kerosene hydrotreater unit and is targeted for commissioning by January 2027. This positions us well for India&#39;s SAF branding requirement for international flights, beginning at 1% in 2027 and progressively increasing to 5% by 2030.</p> <p>On the Andhra Pradesh refinery and petrochemical complex, I&#39;m pleased to share that on Friday, our Board approved the incorporation of a wholly owned subsidiary as a dedicated project company with an initial authorized share capital of up to INR4,900 crores, subject to requisite approvals. The dedicated project company will facilitate swift due diligence, lender engagement and development of the financing and partnership structures.</p> <p>The detailed feasibility reports are in the final stages, following which the financial investment decision will be taken shortly. Moving to our upstream portfolio. The Mozambique project continues to progress steadily, reaching 47% completion as of September 2026, with gas production expected by mid-2028.</p> <p>In Brazil, following the award of the FPSO tender in May 2026, the BM-SEAL-11 project is also progressing in line with planned time lines. Overall, against our FY26-&#39;27 capex target of INR25,000 crores, we have incurred INR13,749 crores during the first half, including INR9,300 crores in Q2.</p> <p>Now coming to our financial performance. Revenue from operations for the quarter stood at INR1.5 lakh crores with a stand-alone profit after tax of INR4,993 crores. For the first half, stand-alone profit after tax stood at INR1,031 crores. On a consolidated basis, profit after tax for Q2 stood at INR4,863 crores, while profit for the first half was INR2,990 crores.</p> <p>Despite the challenging operating environment, our Q2 performance demonstrates the resilience of our integrated business model. The quarter benefited from our agile sourcing strategy, robust refining performance and a reduction in marketing and LPG under recoveries. Our balance sheet also remains strong. Stand-alone gross borrowings reduced to INR15,246 crores as of 30th September compared with INR17,386 crores at the end of June.</p> <p>The stand-alone debt-to-equity ratio improved to 0.16 from 0.19 in Q1. Our borrowings, net of short-term investments stood at INR7,106 crores as against INR4,800 crores in Q1. As we enter the second half of the year, the external environment continues to remain uncertain.</p> <p>However, our performance in Q2 demonstrates our ability to adapt quickly and operate with resilience through periods of significant turbulence. We remain confident in BPCL&#39;s ability to navigate near-term volatility while building long-term value.</p> <p>With that, I will conclude my brief on our Q2 performance, and we&#39;ll be happy to take your questions. Thank you.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you very much. We will now begin with the question-and-answer session. The first question is from line of Probal Sen from ICICI Securities.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Congratulations on a good set of numbers. A few questions quickly. You talked about the crude sourcing mix for the second quarter, with spot crude at 67%-odd and Russia at 37%. Just wanted to get a sense, given that Middle East crude flows have improved, as you mentioned, have we seen any material change in that mix in the month of October so far? And how are we looking at the mix till December when you said you already have crude tied up till at least the end of December?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Let me give in terms of the brief numbers. The Saudi side, Persian Gulf compared to Q1, definitely, it has improved in Q2. Even October, November also, we are expecting a similar lines of higher volume from Middle East, mainly after Yanbu pipeline correction by Saudi, they have started increasing their volumes and certain cargoes are coming from ADNOC also.</p> <p>Only cargoes from Iraq and Kuwait still not coming in full fledged. But otherwise, a good amount of volume is coming from Middle Eastern side. October, our requirement from Russia has slightly come down. But in the month of November, the cargoes from Russia significantly has reduced due to the commercial viability of Russian cargoes, mainly the increase in the freight, we are not getting good offers from the Russia.</p> <p>Now for December cargoes, slightly it has improved, whatever they were expecting a good amount of premium for Russian cargoes. Now the premiums slightly, they have reduced. Maybe it is now comparable with other Persian Gulf grades, Russian Urals. Maybe for December, some couple of cargoes we can take Russian. November will be definitely low in terms of Russian availability -- not availability, Russian cargoes, what we have procured.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Right, sir. So just a follow-up on that. If I remember correctly, sir, I think you had mentioned at the Q1 briefing that blended crude cost was somewhere around Indian benchmark plus/minus about $12 to $15. Has that number changed in terms of delivered crude price to us in terms of actual cost accrued?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Still the freight rates are high, the insurance rate is slightly higher. Still benchmark plus $10 to $12, it depends on which side you are taking the product. For example, if it is from Fujairah, definitely it will be lesser. But if it is for from Yanbu, the freight rates should be higher. But from benchmark, we can take on an average, the landing level is $10 to $12.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Right, sir. The second question was with respect to the LPG. Now sir, obviously, you mentioned, I think, INR290-odd a cylinder for Q2. Now we have seen Asia LPG prices spike quite a bit in October. So if we can get a sense month-wise, what was the per cylinder under recovery in October? And what was it in September? And what are you looking at in November at this point of time?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>See, if you see the numbers, August -- July, it was INR490, August, INR179, September INR199. We are expecting October will be INR245, and it is going up in the month of November, November, expecting at INR328 per cylinder.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Okay. Okay. And one last question, sir, if I may. In terms of the marketing margins, is there any discussion at all in terms of looking -- relooking at the pricing given how sharply product spreads and prices have increased. I know you can&#39;t answer in terms of time line.</p> <p>But just wanted your sense on how you&#39;re looking to navigate the stronger retail -- I mean, higher retail marketing losses, which I&#39;m sure you are encountering at least in October. How are you looking at the situation?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>If you see the quarter 2 numbers, integrated side, there is no big stress on the balance sheet and profitability. We are almost at a normal level of profitability for the quarter, slightly on the lower side, mainly for the higher losses in the marketing under recoveries.</p> <p>But we thought crude prices will stabilize, but still the war is continuing. There is no clarity by what time actually things will improve. But one thing we are sure, once this war resolves, crude cannot command at this price because the supplies are there, supplies are there, production is there.</p> <p>Only thing the route is the disturbing thing. And this Red Sea side, volumes are coming, Yanbu side, even there are certain Houthi attacks on Saudi side, but still a good amount of volumes are coming from the Red Sea.</p> <p>But once SOH route is resolved, we are hopeful crude can come back to the reasonable level. But some more time, we have to wait and see. We are reviewing every month-on-month what is the under recoveries, how long this will continue. But there is no further discussions on any improvement on the marketing margins at this point of time.</p> <h3 class="underline_top">Moderator:</h3> <p>Next question is from the line of Vivekanand from Ambit Private Limited.</p> <h3 class="underline_top">Vivekanand:</h3> <p>Just 2 questions. Number one is on the Mozambique asset. You said that the construction is, I think, 40%, I guess, is what -- 47% is what you said. Can you refresh us on the targets that are there in terms of when -- by when should this project come on stream and first gas? And what will be your share of gas in, let&#39;s say, FY30 from this asset? That&#39;s number one.</p> <p>The second one is in terms of your capex outlook. Any change versus the guidance given? I believe it was around INR25,000 crores in the past. Any change on the annual target for FY27 and &#39;28, along with maybe a key update on the Bina expansion, if you could talk about that.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes. Let me explain on Mozambique first because the project is progressing very well. 47% project progress has achieved. We are expecting mid of 2028, either June or July, the commission date. They have declared at June &#39;28, the first gas we can see. As of date, there is no change in the schedule date.</p> <p>So based on the current progress of the project, we are hopeful mid of &#39;28, we can see the gas. That is one. In terms of the gas flows, size of the gas, the first phase development is for 13 million metric ton of 2 trains development, out of which BPCL is having a 10% share. That means our share-out will be around 1.3 million metric ton of gas. This is only Phase 1 development.</p> <p>And subsequently, based on the reserves, we can develop 2 more trains. Once this particular project is completed, then other trains, we can plan it. So the total size will be around -- BPCL share will be -- BPRL share will be around 4 -- roughly 4.2 million to 4.5 million metric ton of gas if all 3 trains are developed based on the reserves.</p> <p>And the second question, in terms of the capex program, our financial year FY25-&#39;26, the target -- &#39;26-&#39;27, the target is INR25,000 crores. In the 6 months period, we have already reached around INR13,000 crores. We are keeping the same target.</p> <p>But in case if any good progress on the project side, slightly it may go up beyond INR25,000 crores. It depends on the project progress, even certain activities, if the progress is good, maybe this capex program can go up slightly.</p> <h3 class="underline_top">Vivekanand:</h3> <p>Just one follow-up. Any plans on tying up the Mozambique gas to get to Indian customers given that now you have visibility of completion of the project by mid of &#39;28?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Mozambique, we have already tied up SPA for 1 million metric ton of gas to bring it to India. Out of 1 million metric ton already we have started marketing in Q2. Q2 itself, we have started marketing. And certain customers already we have tied up, but small volumes. We have started marketing of the gases.</p> <h3 class="underline_top">Vivekanand:</h3> <p>Right. By when can we expect this gas for you to get tied up, the whole 1 MMTPA? And do you have plans to bring the entire 1.3 MMTPA?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>We have started in Q2 on the sales side. On the sales side, we have started marketing of this gas in Q2. Maybe in next 2, 3 quarters, we can complete 1 MMT.</p> <h3 class="underline_top">Moderator:</h3> <p>Next question is from the line of Sarthak from DSP Asset Managers.</p> <h3 class="underline_top">Sarthak:</h3> <p>Sir, just a couple of questions on the Mozambique side as well. So if we see the balance sheet on the intangibles under development, can you please split as to how much of the INR19,000-odd crores intangibles as well as under the equity method of INR29,000 crores would be pertaining to Mozambique? And how much have we spent post the force majeure? And what can we expect as an incremental spending on the Mozambique side?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes. Mozambique as of date, cumulative basis, we have spent around $2.8 billion. It&#39;s almost around INR27,461 crores. And the future capex commitments based on the current approved project cost is $1.8 billion in the next coming couple of years, we have to spend. The total investment in this Mozambique project will become $2.8 billion plus $1.8 billion around $4.5 billion, $4.6 billion of investment, including the exploration activity, everything.</p> <h3 class="underline_top">Sarthak:</h3> <p>Okay. And this will be up till the gas will be started. So that is till 2028, right?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>&#39;28, mid of &#39;28.</p> <h3 class="underline_top">Sarthak:</h3> <p>Okay. And how much incremental interest cost is there? Has there any uptick on the interest cost for this project?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>For this project, this project development is happening under the project cost -- project financing. There are a consortium of around 8 or 9 bankers consortium at project level. The interest cost will be varying actually. It starts from 6% to 8.5%, 9% based on the current interest rate. So different lenders have different terms and conditions, this project financing has been concluded.</p> <h3 class="underline_top">Sarthak:</h3> <p>Fair. This was very clear, sir. And one last thing. The delta that we see in the balance sheet of intangibles, that is mostly pertaining to Mozambique. Is my understanding correct? So INR16,000 crores has increased to INR19,700 crores, the intangibles under development and a similar increase has been there on the investment under equity method as well?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, investment under equity method is mainly, mainly due to, the particular project, Mozambique project. Earlier it was under PI holding. PI holding means whatever capex is straight away due to common under capex program.</p> <p>But subsequently in the last quarter, last 2 quarters, there was a development. All the assets in development has been moved to Asset Co. That means instead of capex, you will see in the investments. At project level, all the assets and the work in progress moved to equity under Asset Co. So that this capex program, whatever incurred a capex program under development, it has moved to equity.</p> <h3 class="underline_top">Moderator:</h3> <p>Next question is from the line of Yogesh Patil from Dolat Capital.</p> <h3 class="underline_top">Yogesh Patil:</h3> <p>Congrats for the good set of numbers. BPCL GRM has dropped the quarter-on-quarter closer to $32 per barrel compared to the Q1. What&#39;s driving this decline in the BPCL GRM, because most of the independent refiners actually saw their GRM jump on a sequential basis. Could you walk us through what&#39;s behind this quarter-on-quarter dip in our reported GRM? And was there any crude inventory gains during Q2?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Crude inventory gain, generally, we don&#39;t calculate because our average inventory is around 22 to 25 days. So there won&#39;t be any big impact on crude inventories. If any inventory gains are there. To the extent of intermediates, if you are holding a very big amount of intermediaries, then there may be an impact.</p> <p>Otherwise, compared to Q1, the GRM reduction is mainly 2 reasons. One is slightly the -- more or less GRMs are in the same level, Q1 and Q2. Q1 average gas oil spreads are $55, now it is $56 in Q2. Gasoline also $24 and $24. There is no big change in the spread, but 2 important things have happened in the crude procurement.</p> <p>One is the crude freight costs have significantly increased compared to Q1. The Q2 freight costs are very high. And second is Q1, at least most of the period, we used to get Russian crude either at benchmark discount or around the benchmark.</p> <p>But in Q2, certain cargoes we don&#39;t get any discounts on the Russian crude, we have to buy either at the premium of benchmarks or benchmarks. So these 2 have impacted, mostly on the high sulfur grades, impacted the refining GRMs compared to Q1. Otherwise, if you compare the Singapore benchmark GRMs, still our GRMs are much higher.</p> <h3 class="underline_top">Yogesh Patil:</h3> <p>But, sir, the freight cost has gone up for every independent refiner. So why, in our case, crude cost is mattering to the GRM calculation?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>I don&#39;t know other industries, what is the impact of crude inventory gain or intermediary inventory gain, what is the carry forward from Q1 to Q2, we don&#39;t have any such information. We generally track what is your performance compared to the trend of the spread, what is the crude procurement compared to the market trends. As long as we are better than the market trends, that we can conclude our refinery performance is better.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, investment under equity method is mainly, mainly due to, the particular project, Mozambique project. Earlier it was under PI holding. PI holding means whatever capex is straight away due to common under capex program.</p> <p>But subsequently in the last quarter, last 2 quarters, there was a development. All the assets in development has been moved to Asset Co. That means instead of capex, you will see in the investments. At project level, all the assets and the work in progress moved to equity under Asset Co. So that this capex program, whatever incurred a capex program under development, it has moved to equity.</p> <h3 class="underline_top">Moderator:</h3> <p>Next question is from the line of Yogesh Patil from Dolat Capital.</p> <h3 class="underline_top">Yogesh Patil:</h3> <p>Congrats for the good set of numbers. BPCL GRM has dropped the quarter-on-quarter closer to $32 per barrel compared to the Q1. What&#39;s driving this decline in the BPCL GRM, because most of the independent refiners actually saw their GRM jump on a sequential basis. Could you walk us through what&#39;s behind this quarter-on-quarter dip in our reported GRM? And was there any crude inventory gains during Q2?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Crude inventory gain, generally, we don&#39;t calculate because our average inventory is around 22 to 25 days. So there won&#39;t be any big impact on crude inventories. If any inventory gains are there. To the extent of intermediates, if you are holding a very big amount of intermediaries, then there may be an impact.</p> <p>Otherwise, compared to Q1, the GRM reduction is mainly 2 reasons. One is slightly the -- more or less GRMs are in the same level, Q1 and Q2. Q1 average gas oil spreads are $55, now it is $56 in Q2. Gasoline also $24 and $24. There is no big change in the spread, but 2 important things have happened in the crude procurement.</p> <p>One is the crude freight costs have significantly increased compared to Q1. The Q2 freight costs are very high. And second is Q1, at least most of the period, we used to get Russian crude either at benchmark discount or around the benchmark.</p> <p>But in Q2, certain cargoes we don&#39;t get any discounts on the Russian crude, we have to buy either at the premium of benchmarks or benchmarks. So these 2 have impacted, mostly on the high sulfur grades, impacted the refining GRMs compared to Q1. Otherwise, if you compare the Singapore benchmark GRMs, still our GRMs are much higher.</p> <h3 class="underline_top">Yogesh Patil:</h3> <p>But, sir, the freight cost has gone up for every independent refiner. So why, in our case, crude cost is mattering to the GRM calculation?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>I don&#39;t know other industries, what is the impact of crude inventory gain or intermediary inventory gain, what is the carry forward from Q1 to Q2, we don&#39;t have any such information. We generally track what is your performance compared to the trend of the spread, what is the crude procurement compared to the market trends. As long as we are better than the market trends, that we can conclude our refinery performance is better.</p> <h3 class="underline_top">Yogesh Patil:</h3> <p>So one of the reason is the freight cost that has gone up and that is impacting on our GRM. Is that the correct understanding?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>And Russia and Russian side, discounts are not there in Q2. Like, for example, earlier, our most of the total procurement, around 37% of Russian procurement-- if Russian procurement is not available at discount, particular refineries who are using the high sulfur grades, definitely the margins are compared to Q1, or it is on the lower side.</p> <h3 class="underline_top">Yogesh Patil:</h3> <p>Okay, my next question, sir, on again a GRM side, the freight cost has already gone up for the fuel. So here I&#39;m trying to figure out, are those higher freight cost or expenses actually negatively impacting to our GRM? That&#39;s one thing. And are you, because, are you, passing those ex -- the oil product prices when you set up the RTP.</p> <p>Our understanding on this RTP side is that it is a combination of import plus export parity side, and the imports is making up the bigger chunk out of that RTP. That freight cost is also the part of that. So considering all these equations, the question is very simple that the freight rates are impacting on a GRM or not?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>RTP for the product pricing formula. Product pricing formula, product freight is one component, like my procurement of crude, crude freight is another component. If both the freights are in tandem, if it is moving, there won&#39;t be any impact.</p> <p>Sometimes if the crude freight component is going up, whereas freight component is not going up, there is a squeezing on the refining margins or on other side, for example, product freight costs are going up and crude freight cost is not going up, there is an advantage. So these are the market trends. There is no change in the formula, but this time whatever the freight cost on crude has gone up, similar extent the product freight is not gone up.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. Next question is from the line of Mayank Maheswari from Morgan Stanley. Please go ahead.</p> <h3 class="underline_top">Mayank Maheswari:</h3> <p>Hi, sir. Just an extension of the previous question around crude sourcing. Can you just give us a bit of an idea about how September quarter crude sourcing was and what you are doing for the current months and the next few months since you&#39;re loading, I suppose, for November and December as well? What&#39;s going on and how you&#39;ve seen premium shift? Freight, you&#39;ve kind of addressed partly, but what&#39;s going on in the crude market and what you&#39;re seeing on your cost side?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Let me explain on the Q2 side. In terms of the volumes, 37% of volumes come from Russia and 17% is coming from Abu Dhabi and 19% coming from Saudi, Q2 and around 6% from Oman and 9% from U.S. and other countries, only 4% to 2%, 1%. Broadly, in Q2, our term contract for Saudi and Abu Dhabi, majority of the volumes are coming from the same side. These 2 countries a little bit gone to the spot, but Russian still we have maintained at 32%.</p> <p>Coming to October and November, in terms of the percentage, more or less same. But in terms of the November, Russian volumes have come down compared to PG grades. PG grades actually more commercially viable compared to Russian grade.</p> <p>That is the reason November, Russian will be lesser. But December completely, we have not concluded. Maybe another couple of cargoes still it is pending. Maybe another 1 week or 10 days, we can conclude on the December side also.</p> <p>And overall, we are getting the full volume, but there are challenges, certain cargoes, unplanned receipt, for example, cancellation of the cargoes. Immediately, you have to replace with some other cargoes. There were challenges. But during the quarter, we have come across all the challenges. We have addressed all the challenges. We are getting the full volumes and our throughput is clear.</p> <p>In terms of the market pricing, we are completely volatile. I can say certain period of time, crude is available at a discount, certain period of time, crude is available at a premium. For example, certain cargoes, we are the first one. We have taken one cargo for SOMO, crossing the SOH. Earlier, we never tried, but this time, we have tried with a good amount of discount.</p> <p>We got the SOMO cargo. But the second cargo, again, there are certain issues. So there are some challenges getting crude at discount, getting crude at a premium. So it&#39;s a mix. So daily it varies. So there is no clear trend, whether crude is on premium side or discount side. But volumes, we are sure volumes we will get.</p> <h3 class="underline_top">Mayank Maheswari:</h3> <p>Got it, sir. Very clear. I think that&#39;s very helpful. And I think the second question was more related to the Andhra refinery. Can you just give us a sense of the steps now going forward? And what will be the time lines around FID, etc.?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, one is, in the last board meeting, our board has approved for creation of a separate subsidiary company initially with 100%, and whenever the potential partners are ready to join, or subsequently, the dilutions will happen. So for that, the first step, we have approved for creation of the WOS, and it will go to the DIPAM, MoPNG. After MoPNG recommendation, the incorporation of the company will happen.</p> <p>In terms of the DFR, we are almost at final stages. The numbers have been frozen, just reviews are going on. Maybe another couple of weeks we will conclude on the number. Broadly, we are looking at a configuration of 10 million metric tons of refinery with a high intensity of petrochemicals, around 32%-33% of petrochemicals.</p> <p>And the cost numbers, once we are finalizing and take it to the board, that time we can share full details. In the scheduled timelines, we are expecting maybe in next 2-3 weeks we will take it to the board for a final investment decision, subject to financial closure and subject to CCEA approval because this investment is happening through subsidiary company. It requires, based on the Maharatna powers, it has to go to the ministry and CCEA approvals.</p> <p>We are expecting, maybe once board is approving, another 2-3 months, the CCEA approvals will come. But parallel activities, pre-project activities and licensor selection and other things are going on. Parallelly, the selection of licensors and CCEA approvals, the notes will move. Maybe 3, 4 months, we are hopeful the entire approvals will be completed.</p> <p>In terms of environmental clearance, the discussions are completed, the minutes have been recommended, by the committee to the EC authorities. We are expecting shortly that EC clearance also.</p> <p>Once it is there, maybe we can start the actual physical work on the site. In terms of the land procurement, around 4,700 acres of land has been registered in the name of Bharat Petroleum. So that is sufficient for initial work for refinery, but another but 1,400 acres which is required for mainly for greenbelt and other things. So we are expecting by November the entire 6,000 acres requirement of land will be fulfilled by the AP government. So this is the status of here.</p> <h3 class="underline_top">Mayank Maheswari:</h3> <p>And sir, is there an equity level you&#39;re comfortable with in terms of a minimum that you want to have in this project?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>We are planning either 70-30 or 65-30 debt-equity. And we are keen to dilute at least 30% of equity dilution when the project is in progress because discussions are still going on. Once the terms are agreed, then the partners will join with us. So with this, we are comfortable in terms of the investment.</p> <p>Even earlier also, we have discussed our peak debt to equity on a stand-alone basis, our target debt to equity around 1. It should not cross beyond 1 in a significant way at the project peak capex. Once the projects are commissioned, again, we&#39;ll come back to 0.3, 0.4 level of debt equity.</p> <p>That is what we are projecting. When we take any capex project, a similar trend we follow at the peak capex, we take debt equity at 1, 1.1 level of leveraging. And once projects are commissioned, we are hopeful it can come back to 0.4, 0.45 of debt equity. That is where we are comfortable on a standalone basis.</p> <h3 class="underline_top">Moderator:</h3> <p>Next question is from the line of Nitin Tiwari from PhillipCapital India.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>Sir, just for the sake of summarizing, if you can give us a summary of all your ongoing and planned capex projects, the large ones and also a guidance for FY28 and &#39;29 capex numbers?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes. Major projects, I can say one is the Bina Petrochemical complex. Bina is now scheduled completion around 40%. The total project cost is -- Approved project cost for Bina is 43,367 crore. This is excluding taxes, ITC. Cumulative capex till date is INR7,566 crores already incurred and progress is 40%.</p> <p>Scheduled commissioning is mid of &#39;28. We are hopeful Bina project will be completed as per the schedule line. There is no revision at this point of time. The next major project is PP at Kochi Refinery polypropylene project at Kochi Refinery. The total approved capex is INR4,850 crores.</p> <p>Till September 2026, we have incurred around INR1,178 crores. And most of the commitments are done, like, for example, tendering activity and prices have been frozen. And actual progress 55.10% and scheduled completion date is October 27. This is on polypropylene at Kochi. And power project, we have recently approved PRFCC at Mumbai refinery. The total project cost is INR13,626. As of date, the initial activity has started.</p> <p>The capex till Q2, we have incurred only INR130 crore, and the planned capex for this year is around INR1,500 crores. And actual progress 9.2% completed, and scheduled completion date is September 29th. This is the project.</p> <p>And other major projects are small projects compared to this, all are 1,000 crores and 1,500 crores projects. All projects are going well, including the IDPL. There is one pipeline project, it&#39;s almost delayed by 7-8 years. That also, it is taking a good momentum in Q2. We are expecting the project will be completed by December-January. So otherwise, all projects are in full swing. We are expecting as per the schedule projects will be completed.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>Right? So, and the guidance for F &#39;28 and &#39;29 for the capex?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>&#39;28-&#39;29, capex, &#39;28-&#39;29, we are expecting INR40,000 crores plus. It depends on the project progress, maybe INR40,000 crores to INR45,000 crores. And &#39;26-&#39;27, INR25,000 crores, our target project cost. Maybe slightly it will go up because the projects are in full swing. Projects are actually progressing very well. Maybe this INR25,000 crores may go up maybe 5% to 10%.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>Right. So INR25,000 crores in &#39;27, and then, like, you know, about INR30,000 crores, INR35,000 crores is what we can expect in FY28?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>FY27-&#39;28, INR40,000 crores you can expect, INR40,000 crores to INR45,000 crores. We have to finalize a major project anyhow, the plan we have. But other than major project, beginning of the year, generally we review. But other than INR40,000 crores as per our cash flow projection, INR40,000 crores we have taken.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>Sorry, and this INR40,000 crores includes your capex in Andhra as well?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No Andhra will be addition. Once FID is approved, then Andhra will be an addition to the extent of equity commitments.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>Understood. And last piece, I just like, you know, sort of a clarification question again. So, so what&#39;s our dependence on, basically petrol and diesel when it comes to taking it from other refineries as a percentage of our sales?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Sales? Yes, our dependence, this year we are expecting around, 6 million metric tons of products we may take, by end of this year because the -- this year the growth is very high. Our own requirement, 89.27%, it is coming from own refineries for MS, and HSD we are expecting 79.34% comes from our own refineries.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>So 6 million ton, in total, I mean both MS and HSD, this is what you&#39;re going to take?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, yes, we are expecting by end of H2.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. Next question is from the line of Bineet Banka from Nomura. Please go ahead.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Hi sir, thanks for the opportunity. On throughput, I think the number has been very strong over the last few quarters. So this quarter was 118% and it has been consistently over 110%. So can we expect similar run rates in future as well? And is there a refinery turnaround over the next few quarters?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, this year there are turnarounds. Mumbai Refinery Q3, we have certain planned shutdowns around 30 days for Mumbai Refinery. And Bina, a small shutdown of 4.5 days. Kochi refinery will be around 30 days, 30-40 days, because 3 units are going for shutdown. It&#39;s a regular maintenance. Maybe slightly Q3, Q4, we may not be at 118%. So if you remove the adjustment from the shutdown, definitely our refining throughput will continue on similar lines.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Okay. And, and on, on a follow-up question on Andhra Pradesh, so can you share the IRR at mid-cycle cracks, not at the current level of cracks, maybe around $15-$20 per barrel of diesel gasoline crack? What will be the IRR from this project?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Generally, we take any projections-- when we take a large project, we take a 10-year average. We cannot, we cannot deploy any capital based on the short-term trend. We will share the numbers very shortly once FID is clear, we can share. But otherwise, when we take the assumptions, any crude assumptions or price assumption, we take a 10-year price trends.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Okay, sir. Lastly, one more on the LPG compensation. The buffer has continued to go up, and because the under-recoveries are higher than what you have been recovering from the government, so are there any discussions going on for -- regarding the same from the government side? How do we do or go about it?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>LPG already, industry, we have submitted our representation to Ministry for support. As a precedence earlier also, whenever LPG under the coverage, ministry is always helpful and they give the support. But it&#39;s a process. There is a process of getting budgetary support. After that, the announcements will happen. Otherwise, we are in consultation with the ministry for LPG subsidy.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. Next question is from the line of Amit Murarka from Axis Capital. Please go ahead.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>So I, I missed, if you have already shared the number on the call, but what was the GRM net of SAED in the quarter?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>$14 per barrel.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Okay, okay. And ballpark inventory gain, if you could give, like, like last quarter I remember you had mentioned $3 to $4 as inventory loss. So this quarter ballpark number, if you could share?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Very difficult to calculate inventory gain losses because the crude procurement is so volatile, the freight components are so volatile. Earlier when the prices are stable, now maybe one can calculate what is the inventory gain losses. Today, very difficult today. How we are doing the valuation, there are different principles.</p> <p>By crude cost itself with one cargo to another cargo, the cost differential is around $20 to $25 due to freight and other things. So we stopped calculating what is the inventory gain losses because our average inventory is 25 to -- around 25 days only. So if you are bringing any cost efficiency in the crude procurement, that is an efficiency, that it is not an inventory gain/loss. So it is not right to calculate as an inventory gain/loss in terms of the crude.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Got it. And, and just a question on other expenses, so it seems to have gone up quite a bit in the quarter. Even if I exclude the FX loss of about INR400-odd crores, even then it&#39;s like INR9,000-odd crores. Usually it&#39;s a number of close to INR7,000 crores. So could you highlight what are the specific reasons for this jump?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, yes. There are certain one-time items, there are certain regular items. Mainly the transportation, because of increase of the diesel cost, the transportation cost has gone up slightly on account of volume. That is around INR150 crores for Q2 increase compared to earlier quarters.</p> <p>And second impact is like normal increase of octroi and taxes around INR150 crores increase. Forex, anyhow you said you are aware. The one-time impact is generally as a risk management policy to cover my refining operating expenses.</p> <p>Every year, certain percentage of volumes, so we sell the spreads in advance. Those spreads, whatever we have sold in advance, for the next 12 months requirement, again, as to my refinery throughput, certain percentage of spreads we sell it.</p> <p>But due to this very high spread, there is MTM losses, significant amount of MTM losses during this quarter. These are the major things. Maybe in case if the spreads are normalized in next 6 months, this MTM reversal can happen. That is the one-time hit because this particular period the spreads are very high.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>High. Sure, could you give that number of that the MTM loss?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>MTM will be INR1,300 crores other than revised MTM derivatives, around INR1,200 crores, INR1,300 crores something, MTM.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Got it. So that&#39;s the bulk of the movement.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, that is.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Sure. And, generally, like, you mentioned a lot about the crude sourcing already. But if I have to kind of just understand the whole movement around the various crude and the discount premium, so I believe you were getting a meaningful advantage from high Russian crude sourcing which was coming at a discount and which is gone now.</p> <p>So to that extent, is it fair to say that the premium over Singapore which was being high would probably now moderate now to more normal levels, let&#39;s say, as we have been seeing, for other refineries, or let&#39;s say in the prior years for you?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>The Russian discount, definitely it helps a lot in terms of availability of the crude and commercial margins for the refineries. In fact, if you see the trend, in the month of October, Russian crude is at a premium of $12 to $13. Now, recent numbers, I can say it is only $1 to $2. Maybe in the next month, if the Russian is available at benchmark or discounts, maybe we are much better than Singapore.</p> <p>If it is at a premium, definitely we may not be at the Singapore level. But as for the refining performance efficiency side, definitely our efficiency is much higher than Singapore side. One is our distillate yield is 83%-84%, in fact 84% plus only. In fact, last couple of quarters we are ensuring 84% plus of distillate yield.</p> <p>And second is our swing between gas oil and gasoline. So these are the unique advantages for our refineries. So most of the times our GRMs, even there is, you know, Russian discount, so our margins will be better than Singapore.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Sure. And just the last question on capex. You mentioned INR40,000 crores, INR45,000 crores for next year. Does this include the planned spends on Mozambique as well?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, yes, yes. Mozambique, Brazil already factored. Only AP refinery we are not factored in our capex program. Maybe once the board is approved for the AP refinery, accordingly we&#39;ll rework our capex program and we can share the revised numbers.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Sure. And these are all committed capex, right, irrespective of like the cash flow situation next year or something?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Almost. Maybe a little bit percentage we don&#39;t commit because as and when requirement, like for example maintenance or upgradations during the year, we plan it. There won&#39;t be any commitment at it. Maybe 15%-20% non-committed. Every year we have to plan it, and during the year we commit it.</p> <h3 class="underline_top">Moderator:</h3> <p>Next question is from the line of Sumeet Rohra from Smartsun Capital. Please go ahead.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>So just, 2 questions only. One is on the LPG. So last year, sir, what was approved for us, I think, what a quarter -- I mean, the monthly payments till November, or something of that sort. So can you explain? So if my understanding is correct, that means, for the last tranche, we will get paid in November and then, we will not get paid further, or what is my understanding? Can you just explain on that, sir? So secondly, is that...</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, please go ahead.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>Yes, so, and my second question is, sir, you know, on the Brent, see that today the matter of fact is that, you know, a dated Brent trades at about $127, $130 and Brent futures trade at about $115. So basically, what is more relevant for us, the physical oil when you buy, we should look at the $127-$130 level or should we look at the $115 level which is, you know, the Brent futures which trades every month.</p> <p>Because, you know, I mean, if my understanding is correct, you know, we are benchmarked about $90-$95, you know, and beyond that, you know, then our marketing side starts, you know, kind of losing money.</p> <p>So I just want to understand, like, you know, what&#39;s the thought process? Because, you know, the war is absolutely an unknown, right? I mean, nobody knows it. It may finish today, it may finish after 2 years after President Trump leaves. So we don&#39;t-- nobody knows anything.</p> <p>So we are dealing with a very big unknown. So, sir, I just wanted your thoughts on how are you looking at the scenario, you know, and, what&#39;s the timeline of saying that, okay, we&#39;ll make a decision if, prices, you know, kind of, stay longer for higher periods. So, I mean, I just want to understand your thought process on, on evaluating, you know, the, the crude, you know, I mean, on the marketing side of our business.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, one is on LPG, last time whatever subsidy support government has announced that is for 12 months, that will be ending in the month of October, around INR632 crores per month for BPCL. It will be ending in the month of October.</p> <p>Any new support, if it comes in this quarter or maybe next quarter, we are not sure what form, what amount the support will come, then accordingly that will be an addition. But otherwise, last subsidy mechanism, it will be ending in the month of October.</p> <p>And comes to crude sourcing, yes, I agree there is a big gap created between the ICE Brent and dated Brent. What we see in the TV channels, it&#39;s only ICE Brent. The dated Brent, yes, presently it is hovering around $125, $127.</p> <p>Most of our contracts, I can say significant contracts, are linked to ICE Brent-- dated Brent, not to ICE Brent. And certain cargoes may be Dubai-based, it happens, but most of the cargoes are dated Brent. As long as dated Brent is on a higher side, our cost of crude will be definitely on the higher side.</p> <p>Most of the times, if you see the trends, I know recently I have not seen that much of gap between, the ICE Brent and dated Brent, but last 2 months is due to certain issues of war issues, so the dated Brent is on a higher side, so the cost of crude procurement will be, on dated Brent. This is definitely our cost of crude will be on a higher side.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>Sure, sir. And sorry, I mean, if I just make a very quickly ask you one thing, sir, with, you know, as you mentioned that October we will see the end of, the whatever money we were getting on the LPG account.</p> <p>And so the matter of fact is that, if I heard correctly, you highlighted that the LPG under recoveries are going up to 300 plus in November, and October also has been very high. Plus, you know, we are seeing, dated Brent or normal Brent or whatever being at such high levels. So, you know, I mean, my question more to you is as an investor, so how do we look at it?</p> <p>Because, you know, we are losing money on practically every product we sell today. And, you know, so I mean, it&#39;s definitely not a very exciting environment. So, what&#39;s the thought process, on pricing, etc.? I mean, can we look at some pricing method changing going ahead?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>LPG, definitely LPG controlled product. We don&#39;t have any control over the price declarations of LPG. It&#39;s completely under control. And only the -- under recovery support mechanism, government will support some point of time. So there are some precedences, it is not the first time. Otherwise we don&#39;t have any control over the LPG pricing because there are periods, for example, September the LPG under recovery is only INR199, maybe July it was INR490, so now we are expecting INR328.</p> <p>So all the things will move, what decisions will be taken, maybe ministry will take appropriately, on the LPG and the recovery. In terms of MS, HSD, one should not see on the short-term basis. So one has to see -- everyone is hoping the war will resolve. In case if it is continuing for a longer period of time, again we have to review. But at this point of time, we are not hoping this war will continue for a longer period of time.</p> <p>Once the war is resolved, crude is available. It is not that crude is shortage, only the transit is the issue. Otherwise crude is available, sufficient production is there everywhere. Only refining side, there are production losses because there are production facilities has been hit.</p> <p>Refining spreads will continue. So on the refining side, definitely we are hoping the higher refining cycle will continue. In terms of the crude, we are expecting that if war resolves, there won&#39;t be any higher level of crude. It will come back to the reasonable levels. So that is what we are expecting.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. Next question is from the line of Achal Shah from Axis Capital. Please go ahead.</p> <h3 class="underline_top">Achal Shah:</h3> <p>Hi, sir, am I audible?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, yes, we can hear you.</p> <h3 class="underline_top">Achal Shah:</h3> <p>So just wanted to know, so could you quantify the incentives available for the AP refinery project, with respect to GST or power concessions? Broadly, what would-- what could be the ballpark figure as a percentage of total capex or absolute number?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No, there are good incentives. Still we are under discussion. Earlier, Government of AP approved based on our earlier estimations of capex, roughly in couple of elements, maybe tax refunds or GST and capex refund during the work in progress. There are certain incentives, but roughly I can say, it is like a percentage of capex what we have invested.</p> <p>For example, if you are investing some INR50,000 crores or INR1 lakh crores, principally AP government initially they have indicated 75% of capital what we have invested in the asset they may reimburse over a period of 15 or 18 or 20 years.</p> <p>Okay, but otherwise, the subsidy support will come from the AP government. We are expecting the same principle of 75% of capital subsidies over a period of 15 or 20 years, or in between, maybe in the discussions we&#39;ll finalize with the AP government.</p> <h3 class="underline_top">Achal Shah:</h3> <p>Got it. And sir, second is a more structural question. So sir, how do you see the medium to long-term demand outlook for MS, HSD in India? So specifically where I am coming from is like factors such as increasing EV and CNG penetration impacting MS growth. And then changes in transportation and industrial activity affecting HSD demand. So, any on that near to medium term and even longer?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No, yes, at least, we can forecast a little bit, medium term, maybe 3 to 5 years, because India is growing at a 7%-7.5% growth level, and the exports also slowly, if there is no tariff impact of US and most of the FTAs we are signing with various countries, it will help a lot in terms of the export of manufactured goods.</p> So with this background, definitely diesel will grow. Initially we thought 2% or 2.5% growth diesel. Now based on the current trend, when we see the diesel growth can go up to 3.5% to 4%. And MS, even earlier years also almost 5% to 6% growth we are witnessing. We are expecting the similar level of growth for MS also. Even there is a little bit improvement in the EV penetration, but in terms of the number, still, the volumes are coming for MS, HSD. <h3 class="underline_top">Achal Shah:</h3> <p>Got it. So, sir, any sense of where BPCL could end up with respect to the number of retail outlets, from the current level next 5 years, 10 years?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>In the last advertisement, we have almost advertised 4,000 to 5,000 retail outlets, but every year we are taking 1,000 outlets. Maybe next 3 years, maybe one can add maybe 3,000. It depends on the land availability. Main issue of land, getting land in the proper locations, market, that is more important. Otherwise, every year we are planning in the capex, for 1,000 ROs, we are planning for capex of INR500 crores.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. Next question is from the line of Saurabh Jain from HSBC. Please go ahead.</p> <h3 class="underline_top">Saurabh Jain:</h3> <p>Sorry, I&#39;m going back to the point that has been discussed a lot in this call. Is it possible to give a sense in terms of your overall procurement of crude? What could be the, you know, premium that you would have paid over the benchmark Brent? Some sense of that number can be helpful for us?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Very difficult to how much premium because different terms. Some cargoes are on FOB, some cargoes are on DES, some are, for example, through STS. Means, for example, in the enroute, maybe some portion of the distance they will incur, some portion of the distance we will incur. So terms are completely different.</p> <p>So one has to see what is the cost of procurement. One should not see what is premium or discount. Certain cargoes, for example Iraqi cargoes, you got a $20 discount, but finally after the freight if you are adding, maybe it is at benchmark or $5-$6 benefit.</p> <p>So various components are involved, so very difficult to say how much premium from the benchmark. Even someone is calculating it, it is not a representative figure of market trends. One has to see what is the cost of landing, cost of the crude, and what is the value the crude is giving. The differential is the GRM only.</p> <p>This particular period of time when both are volatile. The spreads are also volatile, the crude is volatile, the freight is volatile. So it won&#39;t give any representation if I say even it is available at a benchmark, it is available at a discount or premium.</p> <h3 class="underline_top">Saurabh Jain:</h3> <p>Okay, no worries. You also made a comment that the Russian crude is now available at only a premium of $1 to $2, but then you also mentioned some time back that you are still preferring the Middle East crude. So does it imply the Middle East crude is actually available at a discount to the benchmark?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No, no. I&#39;m talking November. November, the trend is Russian is available at $10 to $12. Okay, compared to $10 to $12 benchmark, then PG side is commercially viable. Now December month, for December month there are certain offers of Russia, $1 to $2 premium over benchmark, that is a delivered product when freight rates are very high. Maybe today if anyone is offering Russian cargo, Russian cargo is preferable than Middle Eastern cargo for December month because November month already we have concluded.</p> <h3 class="underline_top">Saurabh Jain:</h3> <p>Okay. And, what you&#39;re sourcing for Middle East, is it on a delivered basis or, you know, how is the arrangement?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Term contracts are on FOB, Middle East, but spot basis, cargo to cargo, it varies. Some traders, if the cargo is available, if the cargo is on the float, then they may offer at a delivered basis. Otherwise, if the cargo is available, the tanks, the supply point, they offer at FOB. If the vessel idle from their side, they may offer DES, mean delivered. So different combinations. There is no standard combination whether delivered or FOB.</p> <h3 class="underline_top">Saurabh Jain:</h3> <p>Okay. Separately, Aramco sometime back had, you know, announced that they will not ship cargoes to India. So I&#39;m a bit confused, is it into place? Is it into effect or it&#39;s-- you are easily getting available, you know, crude from Aramco?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Nothing, nothing. There is nothing, nothing. There is no such communication. Actually, we have not received anything from Aramco. I don&#39;t know which news article you are referring to.</p> <h3 class="underline_top">Saurabh Jain:</h3> <p>Okay, maybe some, some wrong news that we are looking at. Lastly, is it possible to also share the refining margins by the refinery?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Refining margin we have shared already. Individual, refinery one, you want?</p> <h3 class="underline_top">Saurabh Jain:</h3> <p>Yes.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>We will share separately.</p> <h3 class="underline_top">Moderator:</h3> <p>The last question for today is from the line of Aman Sharma from AS Capital. Please go ahead.</p> <h3 class="underline_top">Aman Sharma:</h3> <p>Yes, am I audible?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, we can hear you.</p> <h3 class="underline_top">Aman Sharma:</h3> <p>So basically, as you have mentioned, the after SAED, the GRM is $14 per barrel, right?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Right, right.</p> <h3 class="underline_top">Aman Sharma:</h3> <p>So basically, I want to understand, when you transfer the refined products from your refinery arm to marketing arm, how do you calculate this refinery transfer price? Is it take -- is it after taking the SAED adjustment?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>When we purchase product from any of other private refineries, it is after SAED. Similar principles we apply for transfer pricing between our refinery to marketing.</p> <h3 class="underline_top">Aman Sharma:</h3> <p>But if I&#39;m not wrong, it is, the SAED is only on the export volumes, right? Even then you pass on the benefits, to the marketing arm?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, yes. Even when we purchase from private refineries, we will pay only after SAED.</p> <h3 class="underline_top">Aman Sharma:</h3> <p>Okay, and my second question, is again on the inventory gain calculation. So I understand you are not calculating the gain/loss this time, but could you clarify like, how you, you usually do the inventory gain or loss calculation?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Inventory gain losses, we have stopped calculating long back for crude. For finished goods, we calculate because inventory gain generally when any refinery is holding crude of around 20 days, my monthly pricing is for 30 days monthly pricing. So it won&#39;t give any inventory gain/loss.</p> <p>Only for example in the processing side, some old batches if you are not processing, keep it in the inventory tank, it will have an impact. But otherwise our continuous process, mostly first-in-first-out, last cargo processed, after that a new cargo will come and replace. So in that scenario, generally we don&#39;t calculate any inventory gain losses. Whatever refining margin is based on the current market trend that is the refining they have generated.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. As that was the last question for today, I now hand the conference over to Mr. Varatharajan sir for closing comments.</p> <h3 class="underline_top">Varatharajan Sivasanka:</h3> <p>Thank you, Naznin. Sir, if you have any closing comments, please go ahead.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, thank you for your questions and for your engagement on today&#39;s call. Above all, we sincerely appreciate the trust and confidence you continue to place in BPCL. It motivates us to keep delivering and creating sustainable long-term value. Should you wish to discuss any aspect of the quarterly results further, our investor relations team will be happy to assist.</p> <p>I look forward to speaking with you again. Thank you once again, and let me take this opportunity to wish you and your families a very happy and prosperous Diwali in advance. Thank you.</p> <h3 class="underline_top">Varatharajan Sivasanka:</h3> <p>And sir, I would like to thank all the participants and the management for engaging in this call and spending time in answering all the questions, and wish you all an advanced Diwali. Thank you.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Thank you.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you so 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>

<h3 class="underline_top">Moderator:</h3> <p>Ladies and gentlemen, good day, and welcome to Bharat Petroleum Corporation Limited Q1 FY27 Earnings Conference Call. 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, then zero on your touchtone phone. Please note that the conference is being recorded.</p> <p>I now hand the conference over to Mr. Varatharajan. Thank you, and over to you, sir.</p> <h3 class="underline_top">Varatharajan:</h3> <p>Thank you, Atharv. Very good afternoon to everyone. I&#39;d like to extend a very warm welcome to all the participants on the call as well as the senior management team of BPCL. We have with us Mr. V.R.K. Gupta, Director of Finance; Mr. Pankaj Kumar, ED, Corporate Finance; Mr. Ashish Goyal, CGM, Corporate Treasury; Ms. Anuya Vatsal Thakar, DGM Finance, Pricing and Insurance; Mr. Balagirish, Senior Manager, Pricing and Insurance.</p> <p>I&#39;d like to hand over the call to Mr. Balagirish for his statutory disclosure.</p> <h3 class="underline_top">Balagirish:</h3> <p>Thank you, Mr. Varatharajan. On behalf of 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 would be making today 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 Q1 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. A warm welcome to the participants of today&#39;s investor call. Our Q1 2026-27 results were released on the exchanges yesterday. I hope you had an opportunity to go through the same. The first quarter of FY27 unfolded against the backdrop of a rapidly evolving geopolitical environment.</p> <p>Persistent tensions in West Asia created uncertainty across energy markets, influencing crude and gas sourcing, price economics and supply chains. Although markets witnessed a brief period of stability during June, the latest geopolitical development has reminded us how quickly it can reshape the operating landscape.</p> <p>As we had indicated during our previous interaction, we expected the first quarter to be a challenging one, and it certainly was. However, instead of just weathering the storm, BPCL has focused on operational resilience and supply chain agility. With customer centricity as one of our core values, we stood steadfast in our commitment to serve the energy needs of our customers in all times.</p> <p>Throughout this period, our priorities remained unchanged. First, to ensure uninterrupted supplies of transportation fuels and LPG to our customers across the country; second, to safeguard the interest of our stakeholders while managing costs responsibly; and third, to adhere to our long-term growth agenda while navigating through short-term volatilities.</p> <p>I&#39;m pleased to say that our teams across refineries, marketing and logistics work together with remarkable agility to ensure continuity of operations throughout the quarter. The experience has also strengthened many of our internal capabilities.</p> <p>Let me cover the sourcing strategy first. Due to disruptions in tied up term crude volumes, we proactively optimized our crude sourcing by significantly increasing spot crude purchases with the spot percentage rising to almost 69% in quarter 1 FY27 from 44% in the corresponding previous year.</p> <p>We diversified our crude sourcing outside of the Strait of Hormuz, exploring multiple geographies, including increasing the Russian crude grades to 38% of our total procurement during this quarter. We also procured 2 new crude grades from Venezuela and Angola.</p> <p>The procurement strategy was achieved by overcoming multiple hurdles, including vessel availability, placement of freight, insurance, etcetera. Further, I would like to reassure our stakeholders that we had already tied up our August volumes and are in the process of sourcing for September 2026, providing us with adequate availability even as the geopolitical situation remains fluid.</p> <p>With respect to LPG, we ensured uninterrupted domestic supplies by diversifying LPG imports during Q1 2027 as well as by maximizing indigenous production from our refineries. Further, various mitigative measures were implemented under the government&#39;s direction to effectively manage the demand-supply balance.</p> <p>Our gas business also demonstrated agility amid disruptions in global LNG markets. Despite force majeure under 2 major LNG long-term contracts, we ensured uninterrupted supply to all our bulk, CNG and PNG customers by procuring from the spot markets.</p> <p>Coming to refinery. Our refineries operated reliably throughout the quarter, supported by the flexible crude sourcing strategy. By maintaining stable refinery operations, we were able to navigate the dynamic operating environment effectively. During the quarter, our throughput was 10.15 MMT, our gross refining margin for the quarter stood at $41.41 per barrel before factoring the impact of export duty and RAC.</p> <p>On the marketing front, demand was healthy across our key products with the domestic sales volume at 13.62 million metric tons during the quarter. Across our retail network, petrol and diesel supplies remained largely uninterrupted throughout the quarter.</p> <p>Our retail network continued to deliver industry-leading productivity with an average throughput of 157 KL per retail outlet per month. We also strengthened our customer reach by expanding our network to 25,485 retail outlets, while our CNG network grew to 2,700 stations, reinforcing our leadership in CNG penetration.</p> <p>We also strengthened our premium fuels portfolio, achieving a 3.88% conversion to Speed 97, while expanding Speed 100 availability across 53 retail outlets. We proudly launched our first stand-alone BeCafe at Srinagar Airport, marking our entry into commercial locations other than our retail outlets and expanding our BeCafe network to 220 outlets across India by the end of this quarter.</p> <p>I&#39;m also happy to share that we recently launched Bharatgas Lite ZIP in Mumbai, a lightweight 10 kg composite cylinder offering instant new connection, express delivery, enhancing customer convenience and safety.</p> <p>We have plans to expand the offering to 100 additional cities across 24 states by 15th August 2026. In our gas business, over Q1 of last year, bulk gas sales registered a growth of 3%, while gas sales across our geographical areas grew by 60% to 85 TMT, reflecting the strengthened momentum in this important growth segment.</p> <p>In line with our go-to-market strategy for petrochemicals, we recently launched our brand BEPOLY for high-performance polymers. This reinforces our long-term objective of increasing petrochemical intensity and creating higher-value product streams from our refining business.</p> <p>Now let me touch upon certain milestones in our inorganic growth journey. While navigating near-term challenges, we are firmly committed to our long-term growth agenda, and our strategic priorities remain firmly on track during the quarter.</p> <p>We completed the acquisition of the remaining stake of 39.14% in IBV Brazil from Videocon Energy Brazil Limited, making it a wholly owned subsidiary of BPRL. This strengthens our upstream portfolio and provides greater flexibility in developing overseas energy assets, mainly the assets are in Brazil.</p> <p>We announced our strategic partnership with Tiki Tar and Shell India Private Limited through a 40% investment in the value-added bitumen venture at a value of INR85 crores. This marks our entry into a growing specialty business aligned with India&#39;s infrastructure ambitions while combining Shell&#39;s technology, Tiki Tar&#39;s manufacturing capabilities and BPCL&#39;s nationwide market reach.</p> <p>Coming to renewables, we advanced our initiatives in cleaner fuels and energy transition. We secured a capacity of 100 megawatts at an estimated capex of INR860 crores in a wind utility tender in Madhya Pradesh with project development expected to commence shortly.</p> <p>On capex front, despite the challenging external environment, we made steady progress across our major planned capital projects under Project Aspire. Majorly at Bina Petrochemical and Refinery expansion project, we achieved a cumulative progress of 30.7% with INR5,900 crores incurred and INR30,000 crores already committed. The geopolitical situation has impacted the supply chain, procurement and execution of the project, but there is no significant impact on the critical line items.</p> <p>However, major long lead equipment has already been ordered, and we continue to work closely with our contractors and suppliers to minimize the impact on the overall project schedule. Other major projects, including the PRFCC project at Mumbai refinery, which has completed 7% and scheduled commissioning date is September 2029.</p> <p>The polypropylene project at Kochi, the scheduled commissioning date is May 28. The project is completed 40% as on date. And the POL and LOBS installation at Rasayani are also progressing in line with the plan. During the quarter, capital expenditure stood at INR4,433 crores, while project expenditure is expected to accelerate over the course of the year in line with the execution milestones, our full year capex guidance is INR25,000 crores remain unchanged.</p> <p>Our proposed Andhra refinery project has also progressed through key developments, including licensor tender evaluation. Land registration process for around 3,082 hectares has been completed. Environmental clearance is expected from MoEFCC by Q2 2026-27, and final approval is expected shortly.</p> <p>Reflecting on our financial performance, I would like to mention that while the external environment may influence the performance of an individual quarter, it does not alter our long-term direction. Our focus is on building a resilient, financially disciplined and future-ready organization while responding swiftly to changing market conditions. Against this backdrop, our financial performance for the quarter was primarily shaped by developments in the global energy markets.</p> <p>Despite underlying operations remaining strong, elevated international product prices during a large part of the quarter resulted in adverse marketing margins. In response, we undertook calibrated retail price revision of approximately INR7.5 per liter across motor spirit and high-speed diesel, which helped mitigate the marketing losses to some extent during the latter part of the quarter.</p> <p>Due to the sharp increase in the international LPG prices, as of 30th June 2026, the cumulative LPG compensation buffer stood at INR15,804 crores after adjusting for the installments received against the already announced LPG compensation of INR7,594 crores. We continue to work with the Government of India on the compensation mechanism and remain confident of their continued support for the domestic LPG business.</p> <p>As you would have seen from our results for the current quarter, the revenue from operations stood at INR1,59,479 crores and a loss of INR3,962 crores on a stand-alone basis. Further, the debt equity at stand-alone gross borrowings level is at 0.19 with borrowings of INR17,396 crores as on 30th June 2026.</p> <p>As the global geopolitical scenario evolves, our priorities are clear: operational excellence, disciplined growth and sustainable value creation. We are closely monitoring global market developments and responding with prudent commercial deci</p> <p>That&#39;s all from our side. I will now be happy to take your questions. Thank you.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you very much. We will now begin with the question-and-answer session. The first question comes from the line of Probal Sen from ICICI Securities.</p> <h3 class="underline_top">Probal Sen:</h3> <p>First question was more of a housekeeping one. You mentioned about the GRM being basically a gross number, excluding the SAED and other sales. Is it possible to share the net number?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, net number -- after SAED, you can roughly take around $17.</p> <h3 class="underline_top">Probal Sen:</h3> <p>That number would have been closer to about $17?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>$17 per barrel, if you remove the SAED component.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Understood, sir. And sir, one thing in the details shared post the results is that marketing division has actually seen a positive inventory impact. If you can kindly make us understand a little bit, given that prices for crude also dropped a bit by the end of the quarter. Just wanted to understand how the -- sorry.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, what we have communicated only marketing trading gains means every fortnight when we see the RTP movement, the RTP differential multiply with what is the inventory we have, that we call it as advances gain losses that we separately disclose. That is the marketing.</p> <p>Because if you compare with starting from 1st April, in the first 2, 2.5 months, the price is increasing then. Only in the Feb -- June only the price decreasing has happened. So, the majority of the reason is on the price increasing then. That was the reason for the quarter, it is recognized as an advance&rsquo;s gains of around INR3,000 crores.</p> <h3 class="underline_top">Probal Sen:</h3> <p>So, is it fair to then say, sir, that in this quarter then, given that it has gone the opposite way, there could be then a negative inventory impact in the marketing segment?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>We don&#39;t know how it ends up by September because we thought the same thing in the beginning of the July. Now things have changed. We are not sure how the things will move. But this is the way we calculate. Every fortnight, what is the RTP differential and what is the inventory we hold it; then accordingly, the differential we calculate and disclose as the advances gain losses.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Got it, sir. And the other question was again regarding basically crude sourcing. Just wanted to understand in terms of numbers, what -- how many days of crude have we actually already tied up if we look ahead at the next couple of months.</p> <p>Obviously, I understand there&#39;s a lot of uncertainty in terms of pricing and everything. But in terms of absolute volumes, how are we placed for the next couple of months from a crude supply perspective?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Broadly, I can explain the numbers. For example, if we are processing around 39 million or 40 million metric tons of crude, around 3 MMT we source domestically from Mumbai. That means balance requirement around 36 million to 37 million metric tons. Every month, we need to import around 3 MMT, 3 or 3.2. To give you the numbers, as on June &#39;26, we have inventory of around 3.8 MMT of crude.</p> <p>That means around 35 days of crude already we have 30th June. And we have already concluded the contracts for the month of July and August. We are hopeful whatever contracts we have committed, every contract, they will be delivering. But based on the recent issues in terms of this Red Sea route, there may be certain issues in terms of a couple of cargoes.</p> <p>So maybe we may not take the cargoes, or they may not be in a position to supply. But otherwise, still 31st August, whatever crude requirements, it is sufficient and by maintaining around 30 days of crude also. And for September, just now the window is opened for concluding the deals.</p> <p>A couple of cargoes already we have concluded. Maybe in the next 1 week or 10 days, whatever September requirement also, we can complete it. So that is -- that I can give up to September only the visibility. Beyond September, we have not started any contracting on the spot volumes. We have to wait and see some more time.</p> <h3 class="underline_top">Probal Sen:</h3> <p>That is very useful. Sir, one last question, if I may. What was the -- earlier, you had been guiding to what was the sort of crude cost effectively with respect to the benchmark, plus/minus whatever premium was it was available. Is it possible to share the effective crude cost for Q1?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>I cannot share. I can give you directionally. In fact, the pre-war situation, the India basket benchmark and landing will be maybe $4, $5 loading, okay, the benchmark and landing, excluding the discounts of Russian Urals. Sometimes the discount will be $2, $3 -- if I remove the Russian, the benchmark and landing will be $4 to $5. But this quarter, April to June, if you ask me, the benchmark and landing will be more than $15.</p> <h3 class="underline_top">Moderator:</h3> <p>The next question comes from the line of Rishabh Shivkumar from Motilal Oswal Financial Services Limited.</p> <h3 class="underline_top">Abhishek:</h3> <p>This is Abhishek from Motilal Oswal. Sir, just there was some issue with the sound. April to June, you said the crude premium will be -- the landing premium will be about $15 or so, right, 1-5?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Benchmark, when I say benchmark, that is the Indian basket. Indian basket means it&#39;s a combination of all oil companies&rsquo; procurement. It is not only for BPCL. When you say that benchmark, the differential of BPCL landing and benchmark will be around $13 to $15, you can take. That is directionally.</p> <h3 class="underline_top">Abhishek:</h3> <p>Okay. Okay. And that has come down now to about $4 to $5, right?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No, no. I&#39;m saying pre-war. Pre-war it was around $4 to $5. Postwar, it is around $13 to $15. Now we have to wait for the second quarter how it evolves.</p> <h3 class="underline_top">Abhishek:</h3> <p>How it evolves. Okay. Fair enough. But I&#39;m seeing shipping rates come off quite sharply. So are you seeing lower...</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>I can give you the benchmarks for pre-war. For example, pre-war scale was hovering around $55 to $60 war scale. That is a benchmark. It went up to the peak level of $600, the war scale. It came down to around $300. Now it is hovering around $380 to $400. So that is the current benchmark indices.</p> <h3 class="underline_top">Abhishek:</h3> <p>Okay. Perfect. And sir, just last question on the overseas E&amp;P assets, what progress happening over there, if you can update us on that?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes. Actually, we have achieved a great milestone in the last quarter, April to June quarter. One is, let me talk about Mozambique. Mozambique, we have already announced the physical progress is 42% have been completed. Earlier quarters only, they have removed the force majeure, and work is in full swing and entire manpower is deployed there, work is in full swing.</p> <p>In terms of the project finance, project finance, the lenders have agreed for continuing the project finance. And all sales purchase agreements are continuing almost majority of quantity, whatever sales purchase quantities have been signed, they are honoring.</p> <p>In terms of that is what Mozambique. In terms of project completion, we are expecting the first gas we are expecting in financial year 2028-29. That is for the Mozambique project. The first project is only for 2 trains. The potential development is almost 16 trains.</p> <p>That means we are -- in the first phase, we are developing a 13.2 million metric ton of gas production, out of which BPRL, one of our subsidiaries is having 10% of the stake. That means our stake of molecule that is around 1.3 MMT in the first phase of development.</p> <p>In the subsequent developments, whenever it happens, additional volumes will come. That is on Mozambique. In terms of Brazil, we have earlier 40% stake through one of our JV in the particular project. Out of that 40% stake, we have a 61% stake by BPRL and 39% by Videocon.</p> <p>During the insolvency proceedings, we have submitted our bid and we are successful. And the entire transaction has been concluded. The entire stake has been transferred to BPRL. Now we are having a 100% stake in 40% of the project PI.</p> <p>So, this project milestone is during this quarter, the operator has signed the FPSO contract, and the work will be starting very shortly. The projected completion of the project will be 2030-31, the first oil will come, 2031-32, the first gas will come from Brazil. The expected reserve size is around 88,000 barrels per day, out of which BPRL have a 40% stake.</p> <p>So, this is -- these 2 major projects. And other projects are small compared to these 2. We have certain project development in Lower Zakum. One is in producing block we have along with IOC and one is in Indonesia. Indonesia, we have submitted the FDP, but not started any work on that. These 4 other major working projects.</p> <h3 class="underline_top">Moderator:</h3> <p>The next question comes from the line of Amit Murarka from Axis Capital.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Yes, hi. Good afternoon and thanks a lot.</p> <h3 class="underline_top">Moderator:</h3> <p>Sorry to interrupt, sir, your voice is not clear. Can you please use the handset?</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Yes. Is it better?</p> <h3 class="underline_top">Moderator:</h3> <p>Yes, sir, better. Please go ahead.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Yes. So, I was saying that in terms of diesel and petrol, what was your own sourcing and how much would have been purchased, if you could give a percentage split of the 2?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Approximately, I can give our sales requirement around 80% our sourcing only. Maybe 10% to 15% we procure on month-on-month basis. It may vary. Otherwise, indicated will be 10% to 15%.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Is it the same for both MS, HSD. Or are you giving a broader source.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>MS will be lesser. Diesel will be higher, but it depends on the realization. For example, if you feel diesel realization more than MS, optimization point of view, produce more diesel and lesser MS in those quarters, it slightly changes. 5% to 6% is slightly changing. We have a swing of around 10% in one of the refineries. So, we can take MS more or HSD more depending on the product realizations.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Okay. So broadly 15% is purchased in that. And secondly, on the crude inventory gains, you&#39;ve shared the marketing gains. Could you give a ballpark number on the crude gains as well?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No, earlier also many times we have clarified, generally, we keep around 30 days of crude on an average. So, we don&#39;t generally calculate because our monthly -- our procurement price is monthly average, we keep around 30 days inventory. So, we have stopped calculating what would be the inventory gains on crude separately.</p> <h3 class="underline_top">Amit Murarka:</h3> <p>Sure. But fair to share that losses would have been minimal in the quarter as in for crude?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>I don&#39;t -- we have not calculated. Maybe you can say that minimal -- most probably minimal, maybe $3, $4 or something. It depends on the price movement, how the price is moving. I can give you some rough number because our average crude value at 31st March is around $99. Now it is $95 or $96, maybe $3, $4 impact.</p> <h3 class="underline_top">Moderator:</h3> <p>The next question comes from the line of Mayank Maheshwari from Morgan Stanley.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Thank you for the call, sir, First and foremost, I had a question around the refining side. You had some pretty good numbers around margins. Would you kind of try to highlight where these margins came from even if you take the SAED impact out, how did you kind of manage that? If you can kind of give us a bit more subjective view around which refineries, Bina, Kochi, etc</p> <p>What were the things that you did that you think can be sustainable and durable here in terms of the volatility in oil that we are going through now. So, in that context, if you can give us some perspective, that would be very useful.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>A couple of reasons. One is definitely the cracks are high compared to any of the earlier years, mainly diesel cracks and ATF cracks are very high. And second, our distillate yields also, we have maintained at the same level around 84%, all 3 refineries put together. But if you see individual refinery wise, Bina is at 87%, better performance and Kochi also better performance, 85%, beyond 84%, 85% range, comparatively, on refinery side performance.</p> <p>In respect of GRMs individual refinery wise, Bina will be definitely higher. Bina will be around $57 per barrel at a gross level, means before special duty -- export duty. And MR is at $34 and KR is $39. Bina mainly due to -- they can process majority of the crude of high sulfur. So high sulfur comparatively, it is cheaper than low sulfur. That was the reason Bina has contributed a lot.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Okay. And sir, in terms of the crude sourcing, you said Venezuela has come in the mix. Where do you think Venezuela now kind of continues? Do you think you can get to a certain percentage in terms of Vene</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Two things. Let me clarify. Venezuela, one is technically our refineries can process or not? Yes, technically, we can process, but it cannot take it directly. We have to take a blend and do it. So technically, whenever commercially if the Venezuelan crude is available, we can very well take. But certain point of time, while there is no continuity of Venezuelan crude procurement because certain point of time, certain months, the offers what they are giving it commercially is not viable.</p> <p>In particular months, they are -- commercially, they are providing a good offer. Those particular months, we are taking the cargoes. That was the reason we are not in a position to take any term contracts for a continuity. As and when in a particular month, if the original crude is comparably cheaper in terms of the crude value, then accordingly, we take Venezuelan crude.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Got it, sir. And sir, the last question I had was more in terms of marketing. You had, had in terms of non-retail, which is basically the industrial side on fuel marketing, what have you seen in terms of the market after the quarter like in the last few months? Have you seen any types of discounting kind of go away now in the market because of refining cracks sit and the</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No, discounting on what, marketing margins? I&#39;m not clear.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Marketing volumes for the industrial side.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes. Marketing volumes already, there is a dip in terms of diesel. But other products due to nonavailability of the products, there is a degrowth in the commercial segment, mainly most of our refinery production, we have shifted to LPG production. So certain grades are not available for marketing. That was the reason there is a dip in I&amp;C (Industrial &amp; Commercial). But diesel, definitely, there is a dip.</p> <p>One is there is a little bit of shift from direct to retail and certain segments where we are offering the price at a market operator price means without any losses or we want to maintain the standard margin, there, the volumes are dipped.</p> <p>And the subsequent quarter, everything depends on the crude movements, how the crude will move, how the cracks will move, what is the parity between retail segment price and direct segment price. Accordingly, the volumes may change here and there.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Okay, Thank you</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you, the next question comes from the line of Gagan Dixit from Elara Capital. Please go ahead.</p> <h3 class="underline_top">Gagan Dixit:</h3> <p>Sir, thanks for taking my question, sir your stand-alone debt increased to INR174 billion from INR105 billion, although your balance sheet is very strong. But sir, Q1 margins remain compressed for other quarters. So, can we expect that some slowdown in the discretionary capex or FY27 capex or your capex remain unchanged for the Bina, Kochi PP or all other projects this year?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes. Our direction, long-term direction, whatever we have committed the projects, all are good in terms of the returns point of view. So, we are not backing out any of the capex program now. And when it comes to the borrowing side, we have a gross borrowing of INR17,000 crores. But at the same time, if you refer the balance sheet, we have an investment of around INR12,500 crores. So, the net borrowing is very small, INR5,000 crores.</p> <p>Even there is a cash loss during this quarter, the net borrowings will be around INR5,000 crores compared to the size of the balance sheet, the debt will be very small. So based on this, even when we say this is temporary, maybe we are foreseeing maybe another 1 or 2 months, things will stabilize, the cash flows will come back. End of the year, we are looking at a stable performance.</p> <p>So, with that, we are hopeful whatever cash flow requirement for all future projects, those cash flows will be generated. And accordingly, we can complete the project without any big stress on the balance sheet.</p> <h3 class="underline_top">Gagan Dixit:</h3> <p>Sir, my next question is about the E&amp;P business. So, your consolidated loss was lower than the stand-alone loss due to INR18.8 million exceptional income that from the FCTR reclassification after the Brazil subsidiary. So, can you clarify whether this is purely accounting in nature? And what are the capex commitments for Brazil and Mozambique over FY27, 30? And when we expect the first cash flow to generate from Brazil and Mozambique, sir?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>First question, rightly said, it is not any incremental cash flow generation. It is pure accounting requirement because that JV becomes subsidiary on account of this, when you do the accounting, accordingly, the FCTR reserves, you have to route it through P&amp;L and take it to the reserves. That was the reason this has come as a P&amp;L addition, but there is no incremental cash flow on account. It&#39;s purely an accounting side.</p> <p>Comes to the projects already Mozambique, I have explained. Mozambique, we are expecting the first gas will come in FY 2028-29. The volume molecule, right, of the volume in the first phase of the development will be around 1.3 MMT for BPCL group.</p> <p>And we are expecting with 100% volumes, we may generate around $350 million on the revenue side before interest and debt repayments. Every year, we&#39;ll get around $350 million from Mozambique project. That is what we are expecting assuming a crude of around $65. We are not taking any very big assumption of crude.</p> <p>Even if crude is at $65, we are expecting around $350 million something it will come, cash flow. In terms of Brazil, one big milestone we have achieved in Brazil is this entire 100% stake in 40% PI we have acquired. Through NCLT process, Videocon share also we have acquired. The shares have been transferred in the name of BPRL Ventures BV.</p> <p>And secondly, the trade association of Brazil also, they have accepted whatever regulatory requirements say, we have completed all regulatory requirements, and it becomes 100% subsidiary. And second development is during this quarter, whatever is required, the major milestone, the FPSO contract has been signed with the vendors. So now the project has started.</p> <p>The project commissioning will be 2031-32 -- FY 2030-31 will be the first oil will come; 2031-32 gas will come. So, this is the additional revenue stream will come maybe after 3, 4 years. Brazil also, it will be on stream now. These 2 are the major products -- projects on upstream side.</p> <h3 class="underline_top">Gagan Dixit:</h3> <p>And sir, just a quick question, if allowed. Just what is the crude inventory at the start of the quarter? I think you told at the end of the quarter; it&#39;s at 3.2 million tons. So, what&#39;s the start of the quarter you are holding the crude.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>31st March, we have started the year at 3.55 MMT of -- sorry, 3.07 MMT of crude and closing will be 2.72 MMT in June. Our finished goods will be 3.79, crude is 2.72 closing.</p> <h3 class="underline_top">Gagan Dixit:</h3> <p>Thank you</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you, the next question comes from the line of Kishan Mundhra from DAM Capital. Please go ahead.</p> <h3 class="underline_top">Kishan Mundhra:</h3> <p>Hi sir, thank you for taking my question Two questions. So firstly, on -- can you share the profitability or the contribution that you have received from the PDPP unit during the quarter? And the second question would be, sir, how is the availability of Russian crude now for the month of September? And what are the discounts like I mean, from the news we hear, they are closer to $7 to $8 per barrel. So, is that true?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>So, let me first explain on the PDPP. Thanks to the war, we have not started any of the production during this quarter, PDPP. Whatever stream available entire stream we have shifted to LPG production. So, there is no production of PDPP during this quarter. So, there is no profit, there is no production, PDPP.</p> <p>And second comes to the Russian crude availability, till August, we have completed the deals, even including the Russian Urals that I spoke. September offers are coming. We have to wait maybe next 1 week, we will come to know what the discount scenario would be. But definitely, based on the recent development in the crude market, now no one is offering any discount for Russian crude.</p> <h3 class="underline_top">Kishan Mundhra:</h3> <p>Okay, understood, thankyou sir.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you, the next question comes from the line of Sumeet Rohra from Smartsun Capital Private Limited. Please go ahead.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>A very good afternoon, sir to you and your entire team, firstly congratulations on keeping the country on in such a tough environment. Now sir, I have a couple of questions more on the investor angle. Can you quantify what&#39;s the marketing loss we&#39;ve incurred in terms of subsidizing fuel? Secondly, sir, what is your LPG negative buffer? If I&#39;m not wrong, it&#39;s about INR15,000 crores, INR16,000 crores.</p> <p>And sir, the matter of fact is that we are subsidizing products and selling in the bigger interest of the country. So, what&#39;s the government support that we are looking at? Because obviously, this is affecting not only the balance sheet of our company, but also the shareholders. So, can you please, I mean, give your thoughts on this, sir? Thank you very much.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>First is on LPG compensation, cumulative compensation buffer is INR15,804 crores as on 30th June. This is a cumulative number. And definitely, we are hopeful government will support, but only thing timing is the issue when we will get the money. But like earlier precedences, whenever LPG losses are there, government always they have subsidized and they have supported. This also we are expecting we will get support.</p> <p>In terms of the fuel side, marketing under-recovery, it is not fair to calculate marketing under recovery only on the marketing side because when your cracks are hovering at $60, $70, sometimes ATF has gone up to $100. You have to see an integrated level what your losses is. So, it is not fair on our account showing refining side good margin and showing marketing and recoveries on the other side.</p> <p>So better to have a clarity on the overall integrated level, that is the performance we have shown in the quarter 1. There are under recoveries if you see marketing individually. But when you see the cracks of very high level of cracks, it is not fair on our account to say this is my marketing under recovery.</p> <p>So, we have to see integrated level, what is our under recovery. Otherwise, we can say some number INR40,000 crores, INR50,000 crores, but whether this number is having a relevance or not, I&#39;m not sure when you have a good amount of cracks.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>But sir, my question comes from this is a matter of fact that shipping costs are elevated and these are not normal times. And today, India has taken the lowest amount of fuel price increase. So obviously, there is an economic interest of companies that are getting affected. So, can you basically help understand on that point as well?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>No, that is what I&#39;m saying because we have thought it is only temporary in the first week of July, the complete scenario changed. We are hopeful in case if crude comes down to $80, $85 in the coming months, definitely, whatever we are seeing is under recoveries, definitely we would be in a position to recoup those. But things again change, crude is going up to $90, $95. So, we have to wait and see. These are all very short-term spikes.</p> <p>Overall, if you ask me what the availability of crude overall world side is and what is the demand still crude is surplus. I think 2 million barrel per day it&#39;s surplus. When demand supply gaps at the worldwide, if it is coming on the supply side surplus, I&#39;m not sure these crude prices will come in at $90 or $95. It had to come down to $80.</p> <p>Only thing is that short term, this war situation says sometimes Strait of Hormuz issues, sometimes Red Sea issues. Let us see these things should resolve maybe another 1 month or 1.5 months, we&#39;ll see the stable markets.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>Okay sir, thank you so much and wish you all the best.</p> <h3 class="underline_top">Moderator:</h3> <p>The next question comes from the line of Vikas Jain from CLSA.</p> <h3 class="underline_top">Vikas Jain:</h3> <p>Thank you for taking my question I have 2 of them. Firstly, is I just want to understand this whole inventory gain in marketing. And also, the fact that you said that at the end of June, crude that you had has been earmarked at about $95 a barrel or so. But if I were to look at Brent, I mean, June closing for Brent was closer to about $73, $74 or so. So, what am I missing here?</p> <p>And in case of marketing, is it that it was transferred at a price earlier and it stayed there and it was much higher? Is that how the inventory gain has happened despite the collapse of price towards the end of June?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Let me explain a little bit on the accounting side. How do you value the raw material? When you have a marketing division also in your organization, then we have to derive what is the net realizable value from the RSP side, okay? So that means, if current RSP is at X amount, at $95 crude at landing level, so I can value at $95. I need not value at the replacement cost, okay?</p> <p>In case if I&#39;m a trading entity, if I have held the crude, then if I don&#39;t have any marketing, then crude replacement may have to value it. That is the difference. Even when you say Brent 30th June, if it is $72, why we are not valued at $72, only at $95 because my realization is at RSP. So, we value from the realization side. That is the reason $95 crude still it is being valued in the books of accounts.</p> <p>And second, gain or marketing losses when we give, these are only advances gain losses. Only we are giving a separate indication. If I would have continued with a standard margin, either this will be an addition or this will be a deletion. If I&#39;m maintaining a continuously standard margin, this impact will be an additional or a deletion to my standard margin. So that is specifically, we give it separately.</p> <h3 class="underline_top">Vikas Jain:</h3> <p>Sorry, sir. Just one clarification on that thing that you explained. So simply put, if crude price, unless crude price goes lower than what the product realization will be, which is what you call, there is no reason for you to earmark it down. I mean you have...</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>For example, My RSP is at INR90, then definitely I would have write down. If my RSP is at INR105 per MS, diesel is maybe INR95 something, still I can value at INR94, INR95 up to my cost of production.</p> <h3 class="underline_top">Vikas Jain:</h3> <p>Okay. And just one thing on ATF, sir. What is happening over there? There are obviously large losses. This, by definition, is not a subsidized product, and we are in a relatively new situation over there. And I think some of the airlines have not taken the option of stable prices. You&#39;re forced to cut prices also. So, what exactly -- how do we think we&#39;ll kind of recover there, the prices over there?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Two things. One is international segment and second is domestic segment. International segment, definitely, the complete pass-on has happened. Even the cracks are at $100, we have completely recovered. In terms of domestic, yes, government has introduced a market stabilization fund. But unfortunately, no airline players have come forward and they signed the MOU.</p> <p>Let us see, wait for some more time. Otherwise, we are continuing to pass on the price increase, not immediately, on a phased manner. Initially, we have increased only 25% and next month, we have increased a little bit. But subsequently, in the loss revision, INR115 we have increased. And next, since the prices have come down, again, we have reduced to INR110. Now according to the ATF pricing, we are moving in with the market price movements.</p> <h3 class="underline_top">Vikas Jain:</h3> <p>Okay. And what is the loss for the quarter -- in the quarter for ATF? Can you give me that number?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>We have not worked out separately. ATF, yes, there are losses. There are losses in domestic segment. There are over-recoveries in international segment. But domestic segment, we have not calculated because if you calculate whether including export duty or export duty, so many confusions can create. Yes, there are losses. April, May, June, we have not passed on the full price cost to the market. There will be some losses.</p> <h3 class="underline_top">Vikas Jain:</h3> <p>And what proportion of your sales is international for ATF?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>I can give roughly 55% to 60% international and 40% to 45% domestic.</p> <h3 class="underline_top">Vikas Jain:</h3> <p>Thank you so much sir, thanks a lot.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you, the next question comes from the line of Sarthak Tita from DSP Asset Managers.</p> <h3 class="underline_top">Sarthak Tita:</h3> <p>Congratulations to the team to weather the impact of this difficult quarter. Sir, just one question and understanding from my side that I require. What is happening majorly on the LPG side?</p> <p>Because I can see that there was some downturn on marketing volumes of LPG in this quarter. I just want to understand how is this quarter looking Q2 compared to Q1 FY27? And then if you can help me with the per cylinder under recovery in terms of rupees in Q1, that would be helpful.</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, we have seen the LPG domestic degrowth in Q1, significant degrowth. It&#39;s a double-digit, almost 14% or 15% degrowth. And we are expecting a little bit degrowth even during this quarter also. Main reason for degrowth in the Q1 is mainly a little bit shortage of the supply.</p> <p>Second is we have introduced a lot of control mechanisms in terms of the delivery booking and other things. So today, we can probably see the bookings are happening more than 90% digital bookings and even delivery confirmation through SMS also very high percentages.</p> <p>So, this is one control which we have done in LPG, so that there should not be any shifting from domestic to commercial. And second initiative as a part of Government of India initiative, we have increased the PNG connections.</p> <p>So, wherever we have geographical areas, where we can lay down the connections and give the PNG connection to the customer, significantly our efforts have been put. And accordingly, the connections have been created in PNG side and around 30,000 or 40,000 connections have been surrendered from LPG. This is the trend we are looking at it.</p> <p>There may be some good amount of numbers we see from LPG consumption to PNG consumption, mainly for the urban segments. Wherever we have geographical areas, definitely, this is going to happen. And this quarter, definitely, we are not showing any big growth in LPG. Definitely, there will be a little bit same to same level of volume or there will be a degrowth in LPG.</p> <p>And per cylinder under recovery, July CP if you take as a base, the per cylinder is INR490. And August CP already announced by Saudi, it is $592. With this $592 CP, it is $210. And since the crude prices have gone up, maybe next month, if they increase against CP, then this under recoveries can change.</p> <h3 class="underline_top">Sarthak Tita:</h3> <p>Understood. Fair enough, sir. Just one more clarification. You mentioned that the LPG share in this quarter is lower. So, is it fair to assume that the share of petrol and diesel will be even higher in Q2 than Q1?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Q2, we are expecting growth will be there, growth will be there. Everything depends on price. For example, if consumer feels prices are going up, we are seeing a pattern. They are taking more volumes. So, the growth will be there. But otherwise, if you see seasonal, whatever 2%, 3% growth we expect, that is what we are foreseeing this quarter.</p> <h3 class="underline_top">Sarthak Tita:</h3> <p>Fair enough, that&rsquo;s all from my side, thank you.</p> <h3 class="underline_top">Moderator:</h3> <p>The next question comes from the line of Pratyush Kamal from Incred Equities.</p> <h3 class="underline_top">Pratyush Kamal:</h3> <p>So, there are 2 questions in my mind, which I wanted to ask. One is regarding the difference between the landed cost and the index such as Brent. Since you said that at the pre-war level, it was near to about $6, $7, and now it has come up to a level of $13, $14. The question which arises in my mind that if I look at the VLCC rates, it has come down to the pre-war level because that is something which is pretty evident from the tanker index.</p> <p>At the same time, if I look at the U.S. Gulf Coast to India freight trade, it has also come down to a pre-war level of about $8.14 per barrel. The only thing which is left is the Middle East to India freight rate, which is still elevated of about 68% to 70% compared to what it was at the pre-war level.</p> <p>So just wanted to understand why the difference is of near to $7 to $8 per barrel coming up between the pre-war and the post war. Is it because of you sourcing a lot of crude from Middle East or partially it is because of insurance and other stops because of which you are paying higher cost. So just wanted to get, I&#39;ll say, a glance on that?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes. When we say port far means it is during Q1. Q1, this particular benchmark and landing, the difference is on account of major 3 components. One is the freight definitely. Second is the insurance. The third one is premium what you pay to the supplier, okay?</p> <p>During April, May, June, during the 3 months, most of the cargoes, you are not in a position to purchase at a benchmark. Benchmark plus premium you have to pay because the spot basis, the crude availability is lesser, then when we negotiate, we are not in a position to get any crude at benchmark.</p> <p>So compared to pre-war period, the benchmark plus premiums is high. In certain cargoes, the premiums have gone up beyond $10. That was the reason. And pre-war situation, most of the cargoes are available at benchmark level without having any premiums or sometimes it may be a $0.5 or $1 discount.</p> <p>Whereas post war, there is no discount, there is no benchmark price available, always you have to pay the premium. If you ask me current, what is the situation? Yes, definitely, the freight rates have been improved current period, maybe last 1 week or 10 days, if you ask me. So, freight rates VLCC has been improved.</p> <p>But the AG side still the benchmark versatility is hovering around 380, 370. So that is the reason still I&#39;m saying the benchmark and landing, it is covering a big component. Maybe 1 or 2 months, it may settle it.</p> <h3 class="underline_top">Pratyush Kamal:</h3> <p>Got it. Understood, sir. And do you see the VLCC supply glut coming up in the fleet market because of a lot of conversions of the Aframax&#39; and Suezmax&#39; tankers into the product slate --into the crude slate because of taking the arbitrage advantage of the higher freight rate, which was at the peak war level in the crude market compared to the product market. And so, do you see any VLCC supply glut coming up, which will lower the prices going forward even more compared to what it was at the pre-war level?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Everything demand supply. Everything demands supply will balance out over a long period of time. Maybe temporary 1 or 2 months or 3 months during the war period, everything is on a higher side, but we are expecting everything will balance it out.</p> <p>Whatever, for example, free supply and free demand, everything will change. So, this is only temporary. Every component on a higher side, freight is higher, insurance is higher and your premiums are higher. Now premiums no more, they are commanding a $10 premium. Already the premiums have come down.</p> <p>Sometimes in the first week of July, even we got a good amount of discounts of $3, $4 discounts of Russian Urals. So, everything depends on the market, market dynamics, how it moves. temporary, you should not take it as a benchmark. We have to see long term only.</p> <h3 class="underline_top">Pratyush Kamal:</h3> <p>Got it, sir. Just last one question regarding the marketing inventory gain which you posted. So, I wanted to understand what kind -- what component of it is coming from the higher retail diesel and petrol prices because, again, the marketing gain could either come from the higher realized diesel and petrol prices or from the lower, I&#39;ll say, the crude prices or definitely higher inventory, which you would have posted in Q1 compared to Q4. So what components are coming up from?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>It&#39;s a simple calculation. There is no component. What is the RTP of the fortnight and what is the RTP of second Fortnight? The differential in the RTP multiply what is the quantity we are holding. That is a simple calculation. There is no...</p> <h3 class="underline_top">Pratyush Kamal:</h3> <p>So, have you increased the quantity of the holding of the final product?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Holding up the inventory with the adjustment of change of inventory.</p> <h3 class="underline_top">Pratyush Kamal:</h3> <p>Okay, got it, thankyou sir.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. Participants who wish to ask a question may press * and 1, Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Varatharajan for closing comments. Thank you, and over to you, sir.sss</p> <h3 class="underline_top">Varatharajan:</h3> <p>Thank you, operator. Gupta ji, if you have any closing comments, sir?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Thank you.</p> <h3 class="underline_top">Varatharajan:</h3> <p>I wish to thank all the participants and the senior management of BPCL for taking time out to participate in the call and share all the details. Thanks, everyone. Have a nice day.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.</p>

<h3>Moderator:</h3> <p>Ladies and gentlemen, good day, and welcome to Bharat Petroleum Corporation Limited&#39;s Q4 FY &#39;26 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 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 Sivasankaran from Antique Stock Broking Limited. Thank you, and over to you, sir.</p> <h3 class="underline_top">Varatharajan:</h3> <p>Thank you, Michelle, and very good morning, everyone. It&#39;s my pleasure to welcome all the participants on this call as well as the BPCL senior management for the fourth quarter FY &#39;26 BPCL&#39;s Results Conference Call. With us we have Mr. V.R.K Gupta, Director Finance; Mr. Pankaj Kumar, ED, Corporate Finance; Mr. Ashish Goyal, CGM Corporate Treasury; Ms. Anuya Vatsal Thakar, DGM Finance; Mr. Balagirish, Senior Manager, Finance. I request Mr. Gupta to deliver his opening remarks.</p> <h3 class="underline_top">Balagirish J:</h3> <p>Before we join the call with Gupta sir, let me just briefly start with the statement. Thank you, Mr. Varatharajan. Good morning. On behalf of the BPCL team, I welcome you all to the post Q4 results con call.</p> <p>Before we begin, I would like to mention that some of the statements that we will be making in today&#39;s 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 Q4 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">VRK Gupta:</h3> <p>Good morning, everyone, and thank you for joining the call today. I hope you have had an opportunity to review our results and earnings release uploaded on the exchanges. As you are all aware, we are meeting in turbulent times amid ongoing tension in West Asia, driving both global and domestic economies through an uncertain phase. There has been major disruption in the global energy supply chains with impact seen across all sectors and geographical segments.</p> <p>Crude and product prices, which remained broadly range bound for much of FY &#39;25-&#39;26, witnessed heightened volatility towards the end of the year and disruptions to flow through the Strait of Hormuz. Forex fluctuations and geopolitical developments continue to remain the key drivers for energy markets.</p> <p>Against this backdrop, we have continued to demonstrate operational resilience across our refining, marketing and infrastructure businesses, while remaining firmly committed to supporting India&#39;s energy security objectives and ensuring uninterrupted fuel availability across the country.</p> <p>Although we witnessed short-term spikes in demand due to panic reactions, resulting in initial disturbances in market supply, we have been managing the situation to ensure sufficient supply security in close coordination with OMCs under the able guidance of MoPNG. I&#39;m happy to share with you that despite mounting challenges amid the ongoing crisis, we have ensured smooth supply of all essential petroleum products, MS, HSD and LPG across the country.</p> <p>While our financials for FY &#39;25-&#39;26 have been strong since the large impact of the war is not fully realized in Q4 due to timing differences. Q1 &#39;26-&#39;27 is going to be a challenging period.</p> <p>Let me now take you through the operational and financial highlights for the quarter and the year.</p> <p>Refineries - Even during the recent war situation, we continue to maintain crude supply security through flexibility in crude sourcing by diversifying procurement strategy and the ability to process multiple crude grades across geographies.</p> <p>We have increased our Russian crude procurement from 25% in Q3 to 31% in Q4, and it continues to increase fill up our supply gaps in the light of the current situation. Further, we have diversified to 8 new grades of crude during the year, covering 4 geographical regions. I would also like to assure stakeholders that crude supplies have been secured through July 2026.</p> <p>Our refining business delivered a resilient operational performance during the quarter, supported by optimized crude sourcing, robust refinery operations and disciplined execution. During the year, our refineries operated at 116% of utilization with refinery throughput of 41.15 MMT, which is highest ever and distillate yield of 84.54%, reflecting the strength and complexity of our refining portfolio. Our gross refining margin for the year 2025-&#39;26 stood at USD11.74 per barrel.</p> <p>On the marketing side, our business continued to maintain healthy momentum driven by steady demand growth across retail and commercial fuels. During the year, our overall domestic sales volume stood at 54.18 million metric tons at an overall growth of 3.5%, with petrol sales growing by 5.7% and diesel by 1% and ATF is 11.4%.</p> <p>BPCL continued to maintain leadership in throughput per retail outlets among PSU peers with average throughput of 143 KL per month in Q4 &#39;25-&#39;26, strengthened by strategic marketing access, strong highway presence and continued focus on customer experience and retail productivity. In the retail segment, we continue to expand our customer and infrastructure footprint during the year. BPCL commissioned 1,691 new retail outlets during this year, taking the overall retail network to 25,323 outlets.</p> <p>Our EV charging network expanded to 6,823 stations, while the CNG network increased to 2,650 stations, achieving network leadership in CNG among PSUs. Digital customer engagement initiatives, including the SBI BPCL Octane Card and UFill continue to witness strong customer adoption and engagement. Further, in our allied retail businesses like Apna Ghar, BeCafe, Wayside Amenities, In &amp; Out Stores, we continue to strengthen nonfuel offering through the expansion of convenience and customer-focused formats across our network.</p> <p>The latest April retail market share, we have achieved MS 30.02% and HSD 29.61% in retail segment. On the LPG segment, as of March 2026, the cumulative negative buffer towards LPG compensation stood at INR12,319 crores. This is after accounting for the 5 installments received from Government of India from November 2025 against the announced compensation of INR7,594 crores. Our gas business continued to deliver strong growth momentum during the year.</p> <p>The annual sales volume stood at 2.29 MMT, registering a growth of 26.5% year-on-year, while the CNG segment in our GS recorded sales volume of 248 TMT, reflecting a robust growth of 62.1%. The business also achieved 100% utilization of the regasification capacity booking with Petronet LNG, the first since inception of LNG imports by BPCL.</p> <p>Let me now update you on the progress of our strategic growth projects and long-term value creation initiatives. The Dearomatized Solvent project at Mumbai refinery with an annual capacity of 200 TMT was commissioned during Q4 FY &#39;25-&#39;26. This first of its kind Make in India initiative is an import substitution and strengthens our presence in the niche specialty products segment.</p> <p>The Krishnapatnam Hyderabad pipeline, a 425-kilometer 2.6 MMTPA multiproduct pipeline was commissioned in Q4 FY &#39;25-&#39;26. The project strengthens efficiency and provides critical evacuation infrastructure for the upcoming projects while reflecting on our broader focus on logistics infrastructure.</p> <p>Further, during the year, we commissioned 2 retail depots, 2 LPG bottling plants, 3 aviation fueling stations and 2 gas pipeline to strengthen supply and distribution capabilities. In addition, projects such as the Irugur-Devangonthi and Mumbai-Rasayani pipelines are under implementation to further strengthen supply chain resilience and network connectivity.</p> <p>We successfully commissioned 1G and 2G ethanol plant of 100 KL per day capacity, each at Bargarh in Odisha in October 2025 and March &#39;26, respectively. The project is aligned with the national policy on biofuels aimed at enhancing energy security, reducing crude oil imports and promoting cleaner and greener fuels. As part of our Project Aspire growth agenda, I would like to provide a brief update on our key strategic projects.</p> <p>The Bina Petrochemical and Refinery expansion project has achieved 23% progress against a planned schedule of 32% with INR4,700 crores incurred and INR25,400 crores already committed. The schedule variance is primarily due to geopolitical developments and associated supply chain challenges affecting the manufacturing and delivery. However, critical long lead items remain on track and all major packages have been awarded by February 2026.</p> <p>Additionally, recent Middle East conflicts have impacted supply pricing and execution time lines. We are actively monitoring the situation and implementing mitigation measures to minimize the impact on overall time lines. For the Andhra Pradesh refinery cum petrochemical project, which is proposed to be a 9 million metric ton per annum refinery and petrochemical complex, key preparatory activities are progressing as planned.</p> <p>Environmental and technical studies have been completed, while detailed engineering and financial appraisal activities are currently underway. This project is supported by strong incentives from the state government of Andhra Pradesh. Other major projects including the PRFCC project at Mumbai refinery, the polypropylene project at Kochi and the POL and LOBS installation at Rasayani are also progressing steadily in line with the planned commissioning time lines.</p> <p>On the upstream segment, I&#39;m happy to share the following updates. On the Mozambique block, on 7th November 2025, the operator informed the Government of Mozambique that force majeure has been resolved. The work has resumed in full swing and the first LNG cargo is expected by mid-2028. Presently, around 6,000 manpower is in the site and around 42% project schedules have been completed.</p> <p>Further, on the BM-SEAL-11 Brazil project, the FPSO tender has been finalized and to be awarded shortly. And work has commissioned for development and first gas is expected by 2031 and &#39;32. The FID has been approved by the operator. Also, through our SPV Urja Bharat Private Limited, the first oil discovery in the unconventional Shilaif play has been made in XN-76 well in the UAE. BPRL has also witnessed the oil discovery during testing of the exploration well, XN-79 02S in the Onshore Block 1.</p> <p>Such positive developments are very encouraging and certainly a significant achievement for BPRL as an international operator. On the green energy front, we are advancing the renewable push with 251-megawatt installed capacity and additional wind and solar projects under execution for 100 megawatts. The overall capital outlay for the projects under renewables is INR1,570 crores.</p> <p>On an overall basis, we incurred a capex of INR20,400 crores. The capex target for FY &#39;26-&#39;27 is INR25,000 crores. Our capital allocation approach remains under prudent and disciplined manner with continued focus on project execution, balance sheet strength and sustainable returns.</p> <p>Let me now guide through the financial highlights for the quarter. The revenue from operations stood at INR134,896 crores. The stand-alone profit after tax at INR3,191 crores and the consolidated profit after tax was INR5,625 crores. Our stand-alone net worth as on 31st March 2026 is INR95,233 crore. The earnings per share for the quarter is INR7.47 per share.</p> <p>As of March 26th, the debt to equity at stand-alone gross borrowings level is 0.11. Overall stand-alone gross borrowings is INR10,480 crores, and we have current investments, including the oil bonds of about INR18,465 crores, placing us at a net surplus on a stand-alone basis. At group level, debt to equity is 0.43 with gross borrowings of INR43,482 crores. Debt equity ratio was net of current investments at group level is 0.25. Given prevailing uncertainties in global energy markets, we will refrain from providing forward-looking guidance at this stage.</p> <p>With this, I conclude my opening remarks and would now be happy to take your questions. Thank you.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you very much. 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>Thank you for the opportunity, sir. First of all, congratulations on a great set of numbers. A couple of questions around the performance. One, if we look at the derived refinery margin for the fourth quarter, is it fair to say that there has been some inventory positive impact in the refining numbers for this quarter, given the timing difference between stocks used and the way prices have behaved? Directionally, at least, can we assume that there has been a significant inventory impact in this quarter?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Generally, we don&#39;t calculate refinery inventory gain losses because our average inventory is less than the cycle - purchase cycle. But when huge price fluctuation movements are happening, that particular point of period, definitely, there will be some gain. But we can&#39;t exactly give any guidance what would be the inventory gains. But definitely, inventory gains is helping the refining margins in Q4.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Sure sir. That&#39;s useful, sir. The second question was with respect to the supply mix. You already alluded to the rising share of Russian crude in our overall supply, and that has helped us offset the shortage from the Gulf. Can we get a sense -- a little bit more granular sense of what kind of supply sources are now there in terms of crude that we have tied up till July, as you mentioned, other than Russia, what are the other destinations?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>We have WTI is one destination. We have tried - Venezuelan crude, we have tried. And even Middle Eastern spot grades also available like Murban and other things, in the market. these are all available. We have tested -- last year, I think, 4 new grades we have tested, Venezuela, Brazil and Angola. And in spot, many of the grades are available, but major source is coming from Russian only. Until July &#39;26, when you see the numbers, the major source on spot is Russia.</p> <p>But term, we have - beginning of the year, we have allocated for term around 55% of our requirement. But we are not getting the full term, maybe around 45% to 46% of our term requirements we are getting, even there are constraints in the Strait of Hormuz, but we are getting --around 45% to 46% of term we are getting, around 10% shortage, that 10% shortage, we are moving to spot. Otherwise, beginning of the year, we have planned for 45% for spot. Now it is happening at around 55% - 60% spot.</p> <h3 class="underline_top">Probal Sen:</h3> <p>That&#39;s very useful, sir. If I can ask a small follow-up. We know that the crude assay or the API and other nature of WTI in Venezuela is very different. So assuming that we have to rely more on those sources, will it have a impact on our distillate yield going forward if the Gulf crudes actually reduce even more?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>No, definitely distillate yield will change. But at the same time, it will have a commercial benefit also. Net-net, we see what is the CAV value addition at refinery and what is our product demand. Accordingly, we balance it out over the product based on the product demand, what is the crude requirement and what is the profitability we can optimize. But we cannot take directly - Venezuelan crude directly, with blend only we can take. So accordingly, we are planning small cargo sizes we can take and blend it with other grades and we take it to the refinery.</p> <h3 class="underline_top">Probal Sen:</h3> <p>Right, sir. One last question. In terms of the capex, you already mentioned the overall number of INR25,000 crores. Can we get a little bit more breakup in terms of segments or key projects that are there in FY27?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>You see our major projects are mainly Bina petrochemical projects, okay? That is for Bina, we are allocating for &#39;26-&#39;27. Refinery plus petrochemicals, we have allocated around INR11,000 crores, out of which 2 major projects -- 3 major projects, polypropylene at Kochi, PRFCC at Mumbai and Bina.</p> <p>For these projects and regular capex for refinery around INR11,000 crores. And the marketing initiatives, our new retail outlet expansion and infrastructure expansion and whatever supply logistics side expansion, we have allocated around INR10,000 crores.</p> <p>And BPRL, we have planned around INR2,250 crores of equity infusion for the ongoing projects. And CGD network -- as a continuous expansion of our CGD network, we have allocated around INR 1,700 crores. Overall, put together, it is a INR25,000 crores capital allocation for &#39;26-&#39;27.</p> <h3 class="underline_top">Probal Sen:</h3> <p>That is very useful, sir. Thank you for the time. 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 Vivekanand S. from Ambit Capital. Please go ahead.</p> <h3 class="underline_top">Vivekanand S.:</h3> <p>Yes, thank you for the opportunity. Two questions. The first one is on the impairment that you booked this quarter. Now in your opening comments, you have mentioned that the production in Mozambique, the construction activity is underway, and you expect first LNG from Mozambique in 2028, mid of that. So why did you take an impairment even after the construction started in Mozambique or restarted in Mozambique? That&#39;s question one.</p> <p>The second one is on the retail fuel operations. Do you see the current environment as conducive for yourself to gain market share, given that some of the private players, which were looking to expand, maybe now they rethink due to the uncertainty in the marketing side. Yes, thanks, those are my 2 questions.</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Coming to the first question, the impairment in our upstream venture is mainly for Brazil venture, not for Mozambique. Mozambique, there is no incremental impairment during this year because the work is going on as per the schedules and 42% good progress has happened. It is not warranted at this point of time any impairment for Mozambique project.</p> <p>The major impairment is for the Brazil project. In fact, actually, the FPSO tender, almost it took 3 years to finalize the FPSO tender. That was the reason the project completion schedules have been further extended to 2031-&#39;32. The oil will come in &#39;31 and gas will come end of &#39;31 -- &#39;31-&#39;32 financial year.</p> <p>Initially, we thought Brazil, the gas and oil will come around &#39;28-&#39;29 financial year, since the project has been delayed by around 1.5 or 2 years. So when you discount the future estimated cash flow to the current value, it is warranted for impairment, assuming all other parameters are at the same assumptions. But since project delay is happening in Brazil, that was the reason there is a need for impairment.</p> <p>And secondly, retail segment, based on the current context, whether increasing the market share is good or not, generally, we don&#39;t see on a temporary basis increase of the market share because in some point of time, whether retail customers, they may come here and other thing. But otherwise, as a long-term strategy, always we -- our endeavor is to improve our market share.</p> <p>So these are all temporary time period we have to face the challenges. But otherwise, our market share initiatives are only for long-term. Sometimes, yes, based on the current market conditions, market share can go up, but our endeavor is to sustain the market share even on a long-term basis.</p> <h3 class="underline_top">Vivekanand S.:</h3> <p>Thanks. Just one follow-up. As far as the carrying value of BPRL goes, now it&#39;s around INR4,100 crores. So is there any broad breakup that you can share of -- the split of this carrying value of INR4,100 crores across the key assets?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>That we will share it separately. Main, that is what I&#39;m saying, the impairment is coming during this year mainly for the Brazil block. Entire amount, whatever impairment, INR4,300 crores is only for the Brazil block. All other assets are -- there is no incremental impairment during this year.</p> <h3 class="underline_top">Vivekanand S.:</h3> <p>Okay. Thank you so much, and all the best.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. We&#39;ll take the next question from the line of Mayank Maheshwari from Morgan Stanley. Please go ahead.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Thank you for the call, sir. My first question was a bit on marketing again. I think you have seen almost pretty much a year of relative market share loss compared to the other peers. Any things that you kind of can suggest which will help you kind of reverse that? Obviously, right now, it&#39;s less conducive, but like over a more medium term, what is BPCL doing around that?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>No. Our objective is there should not be any disruption in the supply chain. That is the first objective. So we have to continue supply to the market and no customer should suffer on account of nonavailability of the fuel. In terms of market expansion and market share expansion, it&#39;s a continuous exercise.</p> <p>Our endeavor is to take at least 32% retail segment market share over a period of time. That was the reason many initiatives we have taken at the retail field. One is through expansion, network expansion is one strategy we have adopted and bringing more and more initiatives to give more convenience to the customers. So these 2 initiatives, our long-term strategy to take up our market share to around -- at least in retail 32% in a couple of years.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Got it, sir. And I think the second question was more related to the upstream side. In terms of total investments in upstream, your share across all the portfolios and now that you have got some good discoveries as well, over the next 5 years, like how are you -- how is BPCL thinking in terms of capital allocation to upstream as a percentage of total capex?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Yes. We have 3 major projects in our hand, already discovered where exploration stage is completed. Now it is either the development stage has started and some work is completed. Let me explain one by one these projects.</p> <p>One is the Mozambique, that is our flagship project, which is having a reserve size of around 70 TCF reserve size. The first phase, the development is happening only for 13 TCF. So out of which our stake is 10%. For that, already 42% is completed. And there is a few potential of future expansions.</p> <p>Once this particular phase is completed, whatever cash flow comes, the first phase is mostly it is under project finance. There is no equity commitment from our side for Mozambique. Whatever we have committed and invested, that is okay. And future, any investments are mainly from the project financing.</p> <p>So there is no future capital commitment from BPCL side through equity. And subsequent phases, definitely whatever cash flow comes from the first phase first time, automatically, the cash flow is reinvested in the subsequent phases. So that is broadly about Mozambique. Coming to the Brazil, the total project capex size is around $6.4 billion.</p> <h3 class="underline_top">Pankaj Kumar:</h3> <p>2.8 is our share.</p> <h3 class="underline_top">VRK Gupta:</h3> <p>So our share out is around 40% means $2.8 billion. So maybe future, our capital contribution will be around $1.2 billion, we have to invest over a period of 3 to 4 years. And this is only in the field only one development. And there is a potential of another development in the same field. Still the exploration and drilling had to happen.</p> <p>But we are -- at least the initial estimation, we are feeling the similar size of reserves are available in another field also. So there is a good potential. But at this point of time, we cannot comment on that potential side. But whatever existing field in Brazil, the daily production of crude, we are expecting around 88,000 barrels per day, out of which 40% is through our joint venture IBV.</p> <p>And this is a good equity, the rights are equity, we can bring in India in case if we want here or we can market our crude rights wherever we want based on the commercial position at that point of time. That is the Brazil.</p> <p>And the third one is lower Zakum -- through lower Zakum and upper Zakum blocks in UAE. Already producing block, it is giving good volume because India consortium is having around 10% of the stake in that. And another discovery we have -- just now we have completed during FY &#39;25-&#39;26. Now it will go for the development plan and the activities will come there. The initial estimations, we are hopeful we have a good amount of reserves there and a good amount of extractable reserves. So once that plan is ready, then we will communicate to you.</p> <p>And beyond that, we have certain producing blocks in India, but very small in size. Our plan is at least very long-term strategy, we are looking at it at least 6.5 million to 7 million metric ton of crude capacity we should have in our group balance sheet. That is our short-term target. So with these projects, we are hopeful we will reach that level.</p> <h3 class="underline_top">Mayank Maheshwari:</h3> <p>Very clear, sir. Thank you.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. The next question is from the line of Nitin Tiwari from PhillipCapital India. Please go ahead.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>Hi. Good morning and thank you for the opportunity. Sir, my question is with respect to your key capex projects that you&#39;ve undertaken. So if you, for our benefit, summarize what is the planned capex for the key projects that you are currently running, which is in Mumbai, Cochin and Bina refinery? And is there any relook at that amount, given the sharp depreciation in INR? That is my first question.</p> <p>Related to that is, given that this year, we are facing a fair amount of challenge in terms of our operating cash flow. So is there any relook at any of the capex programs? And continuing on that, how do we see our debt-to-equity ratio changing? I mean, with the perspective on current operating cash flows that we are going to generate, given the scenario we are in and the capex we have in front of us. So that would be my first question.</p> <h3 class="underline_top">VRK Gupta:</h3> <p>So let me explain our 3 major flagship projects. One is Bina Petrochemical Complex. The total project cost is around INR49,800 crores, out of which only the foreign component will be around INR6,500 crores. So even if there is any foreign fluctuation, the impact on the foreign component is limited. Maybe even a 10% depreciation, the initial estimations of INR6,500 crores, maybe INR6,000 crores, INR7,000 crores on account of foreign exchange fluctuation on that component, it happens. But all other components in the project cost is INR denominated.</p> <p>And around INR25,000 crores tenders have been awarded on fixed price contract, so that there won&#39;t be any price impact on that -- whatever already awarded projects. Maybe around 20% to 25% of project work we are yet to award. There may be a small impact, but we are hopeful whatever approved project cost -- within plus or minus 10% we have approved, we are hopeful within that limit, we will be in a position to complete. But let us see next 1 or 2 years, how the things will happen, what will be the inflation and other things, we have to wait and see. But at this point of time, if you ask whatever approved number within plus or minus 10%, we will be in a position to complete the project for Bina.</p> <p>Coming to polypropylene at Kochi refinery, almost 85%, 90% of the project contracts have been awarded. There is -- we have initially approved at INR5,000 crores plus or minus 10%. Based on the current estimation, we&#39;ll be in a position to complete the project at that level only. So there won&#39;t be any price escalations.</p> <p>And the third project is PRFCC at Mumbai refinery. Last year only, we have approved. The work has just started, the licensor selection and BDEP is going on. At this point of time, we are not foreseeing any major cost escalation at this point of time. Maybe once we reach to the next year, at least a 30%, 40% progress if we see, then we will come to know whether is there any price escalation indications are not there. These 3 are our major projects in India.</p> <p>And all other capex allocations, these are all short-term projects, maybe 1 year or 2 years, these projects can be completed either pipeline or infrastructure depots and other things. We don&#39;t foresee any major price escalations. Only even the steel and material prices goes up, the component is small.</p> <p>We are hopeful as per the original estimated numbers with plus or minus 10%, we&#39;ll be in a position to complete. And other upstream side, whatever projects already we have explained, Brazil, the revised cost we have approved at our Board level, subject to the government approvals. And Mozambique also, we have approved at Board level and 42% project has been completed. We are hopeful within the approved project cost that project also can be completed.</p> <p>So this is overall our project side and the price impact on the project side. Second, when it comes to, when you say, the balance sheet, how do we manage the cash flows and other things, we have a very strong balance sheet. Even March &#39;26, if you see, even we have a capex of around INR20,000 crores we spent last year, still we could maintain our debt to equity at 0.11 stand-alone and 0.25 at consolidated after netting up our investments.</p> <p>This year also, we are expecting INR25,000 crores capex, and we may cross INR25,000 crores, maybe INR26,000 crores, INR27,000 crores at the end of the year if things are going smoothly. Even with this also, we are not foreseeing any big jump of debt equity provided once the crude prices settle.</p> <p>So how things will move in the next couple of months, not sure. But we are hoping whatever challenges today, we are facing, it is only short term. But once things will settle, once the war and blockade is removed at Strait of Hormuz, the supply side becomes normalizes, then we are hopeful by at least July, August, the price stability will come and normality can come back. So we&#39;re not foreseeing any big stress on the balance sheet.</p> <p>Maybe, yes, short term, there may be a stress out because cash flow mismatch has happened. So we have to take certain borrowings during this period. But end of the year, we are hopeful. Let us wait and see how the things will move. Long-term debt to equity, we are projecting by all planned capex, we are not expecting the debt to equity will go up beyond 1:1 at group level.</p> <p>That is our expectation. Once the projects are completed, then definitely the new cash flows will come from the new projects, then maybe in another couple of years, the debt to equity can come back to normal level. Always, we see debt to equity should not cross at 1:1 at peak level. And generally, we are comfortable to maintain at 0.3, 0.4 level debt equity.</p> <h3 class="underline_top">Nitin Tiwari:</h3> <p>Thank you, sir, for the detailed answer. Sir, my second question is also related to the first one. So as you pointed out, we do have a supply challenge because of the disruptions in Middle East. But at the same time, we also have like cash flow challenges stemming from the pricing basically restrictions that we have over here.</p> <p>So I mean, in that backdrop, I mean, and this is more of a hypothetical question. Is there any thought among OMCs to switch back to a regulated regime. At least in the regulated regime, we used to get back our like under recoveries that were there in petrol and diesel. At this moment, while technically, the products are deregulated, but at the same time, there are severe under recoveries as far as our assessments go, but there is no roadmap for recovery of those under recoveries. So any thoughts on that, sir?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Let me explain. You know LPG is already a regulated product. So whatever under recoveries in LPG, definitely, we are hopeful some sort of support comes from Government of India, like earlier, government always supports for LPG. In terms of other products, we feel it is a short-term challenge. It&#39;s not a permanent challenge.</p> <p>So we have seen this situation even earlier also. Even in Russia-Ukraine war also we have seen. So we feel it is a short-term challenge. Definitely, we&#39;ll come back to the normal scenario. Wait and see.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. We&#39;ll take the next question from the line of Sarthak Tita from DSP AMC. Please go ahead.</p> <h3 class="underline_top">Sarthak Tita:</h3> <p>Hi sir. Many congratulations on a good set of results. I just have one question. So on the marketing front, majorly on fuel availability side, we have been reading that there have been some shortages or some changes into the working capital structure for the dealers. So just wanted to check from you as to if there are any changes that you have made or you are reporting any shortages in some highways or few far-fetched fuel pumps. Any clarity on that would help a lot?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>So there is no shortage of fuels. Even if you see our refinery side, the operations are continuing at 118% of refinery capacity utilization. That means crude is available, crude is continuously coming here, our refineries are operating very well. Even in the sales also, when you see the sales last year, almost 3.6% growth, which is much higher than normal expected growth of 2.5%. So whatever market demand is there, we are continuously catering the market needs.</p> <p>And second, some credit, in terms of the credit, our policy, still we are continuing extending the credit to the dealers. So there is no stoppage of credit to the dealers. Whatever credit policy based on the requirements, some controls and other things, we extend the credit. But only thing in case if the money doesn&#39;t come back in time, if there are any defaults with the customers, then definitely, there will be some restrictions on extending the credit. We give the credit, but within 3 days or 4 days, once they collect the cash, they have to pay back to the company. So if there is any defaults, then those customers, we put a control.</p> <h3 class="underline_top">Sarthak Tita:</h3> <p>Okay got it that helps thank you so much.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. We&#39;ll take the next question from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.</p> <h3 class="underline_top">Sabri Hazarika:</h3> <p>Good morning. So 2 questions. Firstly, so there has been a press note, press article where it has been mentioned that I think it&#39;s quoting the management saying that current Russian crude share for BPCL is around 40%, 45%, the discounts are also at $6 to $8 per barrel versus $12, $13 per barrel. So do you confirm this?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>One is percentage, yes, definitely, recent period, the Russian cargo percentage has gone up. Last year, Q4, it was 31%. But whereas the current period because most of the supply on spot basis, only Russian grades are available and more. So Russian product offtake is, and I said around 40%, 41% in the recent time we have taken. In terms of the discount and premiums, daily it changes, okay? So last year, it was in a discount scenario, Russian crude. This year, it is a premium scenario. So it depends. Demand-supply situation or what are the sanctions on Russian cargoes. If there is no sanction, it&#39;s a free market.If there are sanctions, then tight market.</p> <p>So it depends on the market trends. So I cannot say it is available at discount, and this will vary. Discount presently, it is not available at discount at least I can say that.</p> <h3 class="underline_top">Sabri Hazarika:</h3> <p>Okay. Got it. And secondly, regarding your inventory position right now, so how much crude stocks, LPG stocks, product stocks are there at the moment for the company?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Generally, we keep crude stocks around 25 to 27 days, maybe sometimes 1 or 2 days higher because we are preferring keeping higher inventory levels. Maybe 31st March &#39;26, the crude inventory is 27 days. Last year, it was 26 days. Maybe some point of time, maybe 1 or 2 days extra is there additional cargoes in case if we take it, maybe 28, 29 days. But otherwise, we can keep this level only. We cannot keep beyond 30 days because we don&#39;t have any storage also tankage.</p> <h3 class="underline_top">Sabri Hazarika:</h3> <p>Right. And product and LPG?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Product number of days last year, March &#39;25,,it is 25 days. This year, March &#39;26, it is 24 days. More or less same, similar range, we keep it.</p> <h3 class="underline_top">Sabri Hazarika:</h3> <p>Okay. And LPG?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>LPG every day it changes. So today, if we get one cargo, then number of days coverage will be higher. So maybe 3, 4 days, maybe the cargo is consumed, then the number of days comes. So it is a challenge. So we are getting the LPG, we are catering the needs.</p> <p>So generally, we are comfortable at this point of time to keep around 15 to 20 days coverage. But sometimes it may be lesser than 15 days coverage. Sometimes if we get good cargoes, then it will be more.</p> <h3 class="underline_top">Sabri Hazarika:</h3> <p>Got it thank you so much and all the best.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. We will take next question from the line of Bineet Banka from Nomura. Please go ahead.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Hi sir thanks for the opportunity. Firstly, on from what I read from the media report, the Russian crude sanctions will expire by mid-June. It has been extended by 1 month and you said that you have booked your supplies till July and most of it will be coming from Russia. So is there a risk of shortfall, given that there is a possibility that these sanctions will not be extended?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Let me explain, Russian crude is not sanctioned any time. Only entities have been sanctioned, okay? Whereas Iran crude is sanctioned. So once crude is not sanctioned, you have a right to buy from non-sanctioned entities. Even before the war also, we used to continue to buy Russian crude from the non-sanctioned entities. There may be supply from the non-sanctioned entities.</p> <p>So during the waiver period, you can buy Russian crude from any party. During lapse of the waiver period, you can buy only from the non-sanctioned entities. So always, we keep that controls. Whatever Russian crude we buy, always it is from the non-sanctioned entities, either the cargo vessel owner or port or the supplier, those parties should be non-sanctioned entities.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Okay. Very clear, sir. Second question on LPG under recovery. From what I understand from HP and IOCL that under recovery currently is around INR670, INR680 per cylinder. And if you look at the Saudi CP price, it has gone up to like $800 per ton.</p> <p>And if you try to plug in this, the number which we arrive at is much lower than INR680. So what exactly changed in the calculation? Is there a higher spot premium over the Saudi CP because the sourcing mix has also changed from the Middle East to country like US, Venezuela. So again, there will be some higher logistic cost as well.</p> <h3 class="underline_top">VRK Gupta:</h3> <p>You rightly said. Actually, these 2 are the additional components. One is the logistics cost, definitely. Pre-war level, the freight cost, world scale is around 50, 55 level. Now the world scale has gone up to INR600, INR700. So the peak level. This is one component, freight cost is really increased.</p> <p>And the second component, when we say Saudi CP, it applies only to the term contract. If term is not available, when you go to the spot market, sometimes you have to pay a premium of $300, sometimes $200. When you take cargoes from US, definitely, the freight rates will be very high because the transit period itself is to and fro will be almost 90 days. So when you engage your time set up for 90 days, definitely, the freight cost will be higher. So these are the 2 components, if you add it, your actual under recovery will be around INR650.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Sir, have we signed any long-term LPG contracts from sources other than Middle East? And what could be the benchmark for that?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Last year, the industry has signed around 10% of our requirement LPG for US supplies. That supplies have been started. The benchmark will be Saudi CP plus or minus $10, $15 only. Either in a particular month, maybe Saudi CP landing cost may be minus $10 or sometimes it may be plus $10, depends on the freight rate. That was the term we have signed 10%.</p> <p>But spot now recently, we have started taking spot also, LPG spot also from US supplies by sending our time charter vessels there and bringing the LPG. So there, definitely, the landing cost will be higher as compared to term what we have signed.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Okay, sir. Last question, sir, on refinery side, can you give some kind of number around what is the refinery margin trend that we are looking at in April, May?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>No, we cannot give any guidance, April, May, what would be the refining margin. So last year, &#39;25, &#39;26, we ended up with 11.74. So why we cannot give you this refining margin? It depends on various parameters. And every parameter is changing on a daily basis, okay?</p> <p>The crude price, the premium, the freight, the insurance, the product prices. So there is no stable environment where we can give you a little bit indication, okay, this would be look like. So generally, we avoid giving any guidance on what would be the indicative GRMs. Many parameters it influences.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Okay sir. Thank you so much. I will get back in the queue.</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, could you please provide some sense on the delivered crude cost currently, similarly like LPG that is said. We understand that OMCs are paying a premium over the dated Brent prices, along with elevated freight and insurance cost. So if possible, could you share a broad range for crude premiums currently?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>It all depends on which source we take crude. But indicatively, you can take today&#39;s date, if you want to finalize any deal, the Brent is at around $110, maybe our landing will be $120 or $122, maybe today, if you ask me. So every day it changes, my landing.</p> <h3 class="underline_top">Yash Nandwani:</h3> <p>Sure thanks. And sir, my second question is related to a point raised earlier. Given the current situation, is it fair to assume that we could see some meaningful price hike at periodic intervals rather than complete move back to daily price revisions?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>I cannot comment on this. We cannot comment.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you. We&#39;ll take the next question from the line of Sumeet Rohra from Smartsun Capital PTE Limited. Please go ahead.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>Hi sir, very good morning to you and your entire team. Firstly, sir, I mean, extremely great performance for the last financial year. Now sir, I&#39;ll just be very quick and brief about it. So sir, I&#39;ve actually seen your statement wherein you said that you don&#39;t expect any stress on the balance sheet. Now sir, I am absolutely perplexed on this statement, which you&#39;ve made. Because, sir, I mean, we all are aware about what kind of under recoveries today we are facing across all the products?</p> <p>And sir, I mean, just my question to you, honestly, is more as an investor is that if today, bread prices can move up by INR5 and milk can also go up at the same quantum, what&#39;s actually stopping the fuel prices from moving up?</p> <p>As you&#39;ve seen internationally, all the countries in the world have raised prices. So, the point I&#39;m getting at, sir, is that how are we seeing the situation? Or what&#39;s the inflection point where you say that this war is now well into the 85 days, it&#39;s not getting resolved? We are going to align prices to market link. Because sir, today, we do 40 crores liters of fuel across all the 3 OMCs and the amount of money we are losing.</p> <p>So it&#39;s quite perplexing as an investor angle that what are we thinking exactly? So can you please share some thought at least and especially after you said that you don&#39;t expect any stress on balance sheet because obviously, your balance sheet is very strong, but obviously, things are challenging. So, could you please explain a bit from an investor angle, sir?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Let me clarify. When I say there is no stress on the balance sheet, that is the status as on March &#39;26, okay? Even there are certain under recoveries even during the month of March, but still, we could withstand. Now coming to the future, this particular environment, we can absorb for a limited period. If it continues, definitely, no balance sheet can absorb.</p> <p>Once the cash flow mismatch happens, we can absorb 1 month or 2 months. But subsequently, if it continues, definitely, there will be some solution so that our cash flow will continue. So, our cash is required for the future capex requirement, so we can put our investment. If it continues for a longer period of time, definitely, there will be stress if there is no price revisions happen.</p> <p>Some point of time, the price revision and the burden has to be shared among all the stakeholders. That is my statement when I say. But long term, we are hopeful the prices will come back to the normal level. So, at that point of time, whatever our estimated cash flows, if it continues, then there won&#39;t be any stress on the balance sheet. Even if we continue with the large project, there is no review of the existing announced project, that is what I meant.</p> <p>Whatever we have announced, where the work is going on, we are not relooking that project, assuming it will normalize after some point of time. Now how long it will continue, in case if it continues for a longer period, definitely, no balance sheet can take that absorption.</p> <h3 class="underline_top">Sumeet Rohra:</h3> <p>Got that. So, sir, if I can just ask you only one thing very quickly. So, sir, I mean, what we saw yesterday, I mean, a INR0.90 hike or something. So sir, I mean, what is -- I mean, why can&#39;t we go back to a mechanism or what are the hurdles we are facing from going back to the daily pricing wherein the pass-through is quite simply done on a daily basis, which was much before 2022. So, can we go back to that era again?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>I cannot comment anything on the price revision. It is as an industry we discuss and accordingly, what is good for the companies, what is good for the country. Accordingly, decisions have been taken by the industry.</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>Sir, my first question is on the products outside of the auto fuels, bitumen, petcoke, naphtha. If you could just help us understand on an integrated basis, have margins improved versus pre-war levels to now?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>If you see the margins, marketing margins are -- depends on the import parity price only. There is no significant change in the marketing margins. Whatever in the earlier formula based on the formula, our marketing margins will continue. And the product-wise refining margin, generally, we don&#39;t calculate product-wise refining margins. Overall, refining margins only we calculate.</p> <p>That is the margin for the entire basket of products. But marketing side, everything is on import parity. All other products are on import parity only. Whatever, for example, my marketing margins are around 4% or 5% of my sale price, similar levels, we continue to maintain in terms of the marketing margins.</p> <h3 class="underline_top">Somaiah V:</h3> <p>Got it, sir. Sir, second question is on fuel and loss. If you could just help us understand what is the approx fuel and loss across refineries and if possible, across Kochi, Bombay, if you can just split it?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>For Q4 total is 8.41% Kochi, 5.64% for Mumbai refinery and Bina is 9.01%, total fuel and loss.</p> <h3 class="underline_top">Somaiah V:</h3> <p>Sir, would we have a year back what this number would have been in case we have it handy?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Actually, I don&#39;t have. We&#39;ll share it. We&#39;ll share it. Similar range only. Maybe 0.2, 0.3 variation, either this side or that side. Generally, total fuel and loss will be less than that.</p> <h3 class="underline_top">Moderator:</h3> <p>The next question is from the line of Sucrit D. Patil from Eyesight Fintrade Private Ltd.</p> <h3 class="underline_top">Sucrit Patil:</h3> <p>I have 2 questions. The first question to Mr. Gupta is from a technical standpoint, how is Bharat Petroleum optimizing its capital structure to balance growth investments in refining, marketing and renewable energy with debt sustainability, especially given the capital-intensive nature of oil and gas operations.</p> <p>Can you shed some light on this, and on how the framework has been used for cash flow for forecasting, interest rate management and working capital to ensure liquidity while still maintaining the profits? First question, I&#39;ll ask the second question after this?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>You asked one question, it covers everything, yes. Let me broadly give you a clarification on our capital allocation. Whatever projects we take, every project may not give the similar returns. The objective is when energy sector is growing at a 2% or 3% on an annualized basis, if you want to grow as a company, then you have to diversify even within the energy sector, which particular areas we have to keep the investment.</p> <p>If you want to diversify beyond the energy sector, which sectors you have to allocate. The objective is how best optimum returns we can give it to our stakeholders. That is the main objective. So even when there is a market potential for renewables, we know the renewables will give only very -- rate of returns are around 8% to 9% only. But at the same time, we have net zero objectives. We have to balance our portfolio, keeping capital allocation for renewables.</p> <p>So, in terms of the returns point of view, it gives a lesser return. But objective point of view, we have to give more allocation for renewable. Accordingly, we have taken a target of 2 gigawatts in the immediate period for renewables. So even it is giving a lesser return, but our endeavor is what extent maximum we can use it within our refinery so that the returns will be much, much higher instead of purchasing power from outsourced sources, better to generate the renewable power.</p> <p>It means 2 objectives, one is net zero objective as well as giving good returns in terms of using in our refinery. So that is the reason whatever expansions we are taking for 2 gigawatt, most of the output we are using within the refinery only.</p> <p>And second, in terms of expansion point of view, we have seen there is a big potential advantage if we integrate the petrochemicals with our refinery intermediaries, then it can give a good value addition for the refineries. That is the reason we have taken a couple of years back petrochemical strategy, where we don&#39;t have any big presence in petrochemicals. Then accordingly, we are allocating a good amount of capital for the existing projects.</p> <p>Even tomorrow, upcoming projects also, the petrochemical intensity will be very high, so that it can meet the product demand in India because the growth is almost 5% to 7% growth petrochemicals, whereas in India most of the petrochemical products are import driven. So that is the reason our major capital allocation, if you see, it is happening in petrochemicals.</p> <p>The third major capital allocation is happening in upstream side, where we have already completed the exploration activities, where it is moving to development level, where we are putting up more amount of money so that we have a good clarity after commissioning of the project, the cash flows will come back.</p> <p>And today, we have a refining capacity of around 41 million metric tons, whereas the feed, our own feed is very less as compared to our refinery requirement. So, with all these projects, we are expecting at least 6 million to 7 million metric ton of exploration. We should have either rights on the crude oil or we should have share of profit on the crude oil.</p> <p>Accordingly, we are targeting around 6 million to 7 million metric tons of crude, we should have our own. That is the reason we have allocated capital. But whatever capital allocation projects we take, definitely, if it is not giving a commercial return, generally, we are very prudent in terms of the capital allocation. If we are clear about the returns, then only we allocate any capital.</p> <p>You see any of our earlier projects of IREP or any other project. So, it always gives good returns. And our endeavor is timely completion of the project without any project cost escalation. These 2 are our objectives. So, in terms of the debt equity, earlier also, I said we never take extra leverage. We are comfortable debt equity at 1:1 at peak level. But subsequently, after commissioning the project, the debt equity should come back to the normalized level, say 0.4, 0.5. So then only we can take up that large project.</p> <p>And most of the projects, we look at it, how fast the cash flows can come back, what is the netback period? As long as if the netback period is 5 to 6 years, then we are comfortable, at least 80%, 90% of my investment can come back in 4, 5 years. Then the risk levels will be lesser. So automatically, we can share the interest and debt. So, these are the broader principles we take.</p> <h3 class="underline_top">Sucrit Patil:</h3> <p>My second question to Mr. Goyal is, looking ahead, how do you see treasury operations evolving to support Bharat Petroleum&#39;s growth? What measures are being taken to strengthen liquidity management, forex risk mitigation and funding diversification across domestic and international markets?</p> <h3 class="underline_top">Ashish Goyal:</h3> <p>Hi, Ashish Goyal this side. So first and foremost, if you were to actually have a look at our borrowing structure, the foreign currency loans on the balance sheet are almost very minimal. So as far as the exposure in foreign currency borrowings are concerned, at the moment, at this particular juncture, it is very, very less.</p> <p>Of course, the treasury functions keep on evaluating the cash flow situation on an ongoing basis, as well as the projections on the basis of the evolving market conditions. And we are taking all necessary steps to arrange for the funds at the most competitive rates.</p> <h3 class="underline_top">Moderator:</h3> <p>We&#39;ll take the next question from the line of Bineet Banka from Nomura.</p> <h3 class="underline_top">Bineet Banka:</h3> <p>Just a small follow-up on your answer to a previous question. You said landed crude cost versus the benchmark, the difference is currently $10 to $12 per barrel. What was this number before the war?</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Before the war, I can say WTI, we used to take a Brent plus $5 -- Brent plus $4 or $5. And peak, it went up to $20 also, Brent plus $20, Brent plus $25 also certain cargoes we had on the deals.</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 the management for closing comments. Thank you, and over to you, sir.</p> <h3 class="underline_top">VRK Gupta:</h3> <p>Thank you, everyone, for your wholehearted participation in today&#39;s con call. Looking ahead, while markets may remain volatile in the near term, BPCL integrated operating model and resilient balance sheet position us well to navigate the evolving energy landscape.</p> <p>As we celebrate our 50th foundation year, having successfully navigated multiple industry cycles, we remain confident in our long-term strategy, execution capabilities and ability to deliver sustained value. Aligned with the Government of India&#39;s vision, Atmanirbhar Bharat, we continue to strengthen domestic energy infrastructure and invest in future-ready energy platforms.</p> <p>Before I conclude, I would like to take this opportunity to thank the entire BPCL team for their unwavering commitment and collective pursuit of excellence and growth. I also extend my sincere gratitude to the Ministry of Petroleum and Natural Gas, Government officials, our valued customers, vendors and business partners for their continued support, trust and confidence as we move forward in energizing the lives of the country. Thank you.</p> <h3 class="underline_top">Moderator:</h3> <p>Thank you, members of the management. Ladies and gentlemen, on behalf of Antique Stockbroking Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.</p>

<h3>Moderator:</h3> <p>Ladies and gentlemen, good day and welcome to the Bharat Petroleum Corporation Limited Q1 FY &#39;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 &lsquo;*&rsquo; and then &lsquo;0&rsquo; 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 &ndash; GM (Pricing and Insurance) and Mr. Balagirish &ndash; 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&#39;s FY &#39;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 &#39;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&#39;s latest projection, Brent is likely to be 67&ndash;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&#39;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 &amp; 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&rsquo;s total negative buffer before the impact of the said compensation is Rs. 12,523 crore as of June &lsquo;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 &amp; Energy Security:</h3> <p>In line with Government&#39;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 &amp; 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 &amp; 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&ndash;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 &lsquo;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&#39;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&amp;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&ndash;2.4 MMT. But this quarter, March and June, our inventory levels are around 2.9&ndash;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&rsquo; 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&hellip; 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&ndash;August and September, it is around Rs. 30.</p> <h3 class="underline_top">Probal Sen:</h3> <p>And what was it in Q1, ma&#39;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 &#39;26 and FY &#39;27?</p> <h3 class="underline_top">V. R. K. Gupta:</h3> <p>For FY &#39;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 &#39;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&rsquo; processing. That is the major reason. Otherwise, Russian crude, in terms of the percentage of Russian crude, there is no big change&mdash;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&amp;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&#39;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 &#39;26 and FY &#39;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&amp;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 &#39;27-28 and FY &#39;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&ndash;0.5 level of debt equity. This year and next year, since our CAPEX is around Rs. 20,000&ndash;22,000 crores, we do not foresee a significant improvement in debt equity. We expect to maintain 0.1&ndash;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%&ndash;35% range.</p> <h3 class="underline_top">Yogesh Patil:</h3> <p>So it is expected that it will remain in the range of 30%&ndash;35% for the remaining period of FY &#39;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%&ndash;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&mdash;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&amp;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 &rsquo;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&ndash;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 &rsquo;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&amp;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&#39;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 &#39;25 and 1st quarter FY &#39;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 &#39;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&ndash;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&mdash;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 &#39;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&ndash;300 crores, aided by government subsidies. EBITDA contribution from EV charging stations is expected to be modest, around Rs. 10&ndash;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&ndash;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 &lsquo;25 to June &lsquo;25, there are two major factors. One is excise duty&mdash;end-of-year payments in March are around Rs. 7,000&ndash;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&ndash;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&ndash;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 &#39;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&ndash;8,000 crore.</p> <h3 class="underline_top">Vikas Jain:</h3> <p>Understood. One more thing&mdash;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&ndash;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 &#39;26 is Rs. 20,000 crore, FY &#39;27 slightly higher, but FY &#39;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 &#39;28 around Rs. 34,000 crore, and FY &#39;28-29 around Rs. 35,000 crore. FY &#39;26-27 is estimated at Rs. 20,000&ndash;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&mdash;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&ndash;70 range, our margins remain healthy. If crude rises above $70&ndash;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&ndash;6 months, if crude is at $60 and daily pricing is implemented, what could margins be? Rs. 4&ndash;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&ndash;3 per litre is comfortable for us.</p> <h3 class="underline_top">Kishan Mundra:</h3> <p>This Rs. 2.5&ndash;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&ndash;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&ndash;25,000 crore range.</p> <h3 class="underline_top">Somaiah V:</h3> <p>Helpful, sir. The Rs. 6,500 crores for refinery and petrochemicals&mdash;will this predominantly be for Bina? Also, what is Bina&rsquo;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 &#39;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 &#39;24 and FY &#39;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>

<h3>Moderator:</h3> <p>Ladies and gentlemen, good day, and welcome to the Bharat Petroleum Corporation Limited Q4 FY &#39;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 &#39;25-&#39;26 and 6.3% in FY &#39;26-&#39;27, reflecting continued resilience and domestic demand momentum. India&#39;s GDP growth is expected to range-bound between 6.1% to 6.5% in FY &#39;25-26 as per different agencies&#39; forecast. In FY &#39;24-&#39;25, India&#39;s inflation rate moderated to 4.6% with global oil prices easing, and the RBI has also lowered its inflation projection for FY &#39;25-&#39;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&#39;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&#39;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 &#39;24-&#39;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 &#39;24-&#39;25, taking the total CNG network to 2,370. We added 3,313 EV charging stations during FY &#39;24-&#39;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&#39;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 &#39;24-&#39;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 &#39;24-&#39;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&#39;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&#39;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 &#39;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 &#39;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&#39;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&ndash;4.5 MMT of refinery products and around 3.4&ndash;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&hellip; 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 &#39;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&#39;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&#39;s CEO indicated&mdash;they are expecting work to resume around June&ndash;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&rsquo;s GRMs are generally higher.</p> <p>Second, yields matter. Bina&rsquo;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&ndash;$9 range. If Russian crude is available at around 34% with a discount of $3&ndash;$4, which are the basic parameters, refining margins should remain strong.</p> <h3 class="underline_top">Sabri Hazarika:</h3> <p>Right. And $3&ndash;$4 is the current Russian discount?</p> <h3 class="underline_top">V.R.K. Gupta:</h3> <p>Yes, around $3, roughly $2.8&ndash;$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&mdash;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&#39;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&mdash;they haven&#39;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 &#39;24-&#39;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&rsquo;t be significant pressure on incremental borrowings&mdash;maybe INR 1,000&ndash;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 &#39;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&mdash;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 &#39;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 &#39;25-&#39;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&mdash;maybe INR 65&ndash;70 or INR 60&ndash;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&amp;L for the CGD business moving on your standalone GAs over the next 1&ndash;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 &#39;25-&#39;26, approximately INR 2,000 crores is planned for CGD capex. Volume growth in CGD is very strong&mdash;for example, CNG sales grew 81% in FY &#39;24-&#39;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&rsquo;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 &#39;24-&#39;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&#39;s been a commendable performance, especially given the LPG under recovery absorbed. As an investor, I have a question: In FY &#39;24, the PAT was about INR 24,000&ndash;25,000 crores, and in this financial year, it&#39;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 &#39;23-&#39;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&ndash;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&ndash;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 &#39;26-&#39;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 &amp; 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&mdash;contracts, SPAs, and financing&mdash;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&#39;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&#39;s 12&hellip;?</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 &mdash; 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%&ndash;32% Russian crude in the coming months.</p> <h3 class="underline_top">Vikash Jain:</h3> <p>And just one last point &mdash; 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&ndash;$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&ndash;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 &#39;26 and &#39;27? Will it be meaningful, or more likely FY &#39;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 &#39;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 &#39;26 and &#39;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 &#39;27&ndash;&#39;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&ndash;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&ndash;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&ndash;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&rsquo; 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&rsquo;s reference, the CP has been around INR 620&ndash;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&ndash;$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&ndash;$30 per ton, including freight and other costs.</p> <h3 class="underline_top">Sabri Hazarika:</h3> <p>$20&ndash;$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&rsquo;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>