Bharat Petroleum Corporation Ltd
NSE:BPCL
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Bharat Petroleum Corporation Ltd
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Good day, ladies and gentlemen, and a very warm welcome to the Bharat Petroleum Corporation Limited Q4 FY '18 Earnings Conference Call hosted by IIFL Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harshavardhan Dole from IIFL Capital Limited. Thank you, and over to you, sir.
Thanks, Ali. Hello, everyone. On behalf of IIFL, I welcome you all for the fourth quarter earnings call of BPCL. Today, we have with us the senior management team of BPCL represented by Mr. K. Sivakumar, ED in charge Finance; Mr. Rajamani, ED Corporate Treasury; Mr. Arun Kumar, ED Retail; Mr. Prasad Panicker, ED Kochi Refineries; Mr. Gupta, who's GM Corporate Finance; and Ganesan Jaibal, who's Senior Manager, Pricing & Insurance. I would request Mr. Rajamani to give us an update over the quarter gone by in terms of operations as well as financials, post which we can open the floor for the Q&A. Over to you, sir.
Thanks, Harsh. Good afternoon, one and all. This is Ganesan. Before we begin, I would like to mention that some of the statements that we will make during this conf call may be forward looking in nature, and we believe that expectations contained in such statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. These forward-looking statements represent only the current expectations and beliefs, and we do not provide any assurance that such expectations will prove correct. Our annual results were published yesterday, and we have updated the handouts containing the major highlights immediately thereafter. We have closed the Q4 FY '18 quarter with a profit after tax of INR 2,674 crores, which is about 45% higher than the comparable quarter last year. The profit after tax for the full year 2017/'18 is INR 7,919 crores as against INR 8,039 crores for the year '16/'17. Earnings before interest, tax, depreciation and amortization, EBITDA, amounted to INR 4,554 crores for the quarter versus INR 2,835 crores for Q4 FY '17. For the full year, EBITDA stood at INR 14,680 crores. That is 9% higher than INR 13,430 crores for the financial year 2016/'17. Major capitalizations under the integrated refinery expansion plan have been completed resulting in higher depreciation and non-capitalization of borrowing costs. Hence, depreciation and interest both were significantly higher than the comparable periods. Profit before tax was higher by 63% at INR 3,594 crores for the quarter as against INR 2,203 crores for Q4 FY '17. For the full year, the number was INR 11,998 crores as against INR 11,043 crores for the previous year. We had a ForEx loss of INR 122 crores this quarter as against INR 9 crores for the same quarter comparable last year. For the full year, there was a ForEx gain of INR 332 crores as compared to INR 31 crores for the previous year. Gross under-recoveries on sale of SKO PDS were at INR 216 crores for the quarter as against INR 287 crores for the corresponding quarter last year. For the full year, this amount stands at INR 719 crores. Net under-recoveries after accounting subsidy have been nil for the quarter as well as for the financial year 2017/'18. Advantageous share gain on inventory amounted to INR 449 crores for the quarter and INR 1,296 crores for the full year. This is as against a gain of INR 449 crores and INR 3,599 crores for the corresponding quarter and year [indiscernible]. Please note that these inventory gains are the combined gains for both refining and marketing taken together. CapEx for the year has been at INR 8,998 crores. The IREP at Kochi was fully commissioned during the financial year and all will be [indiscernible]. We have been able to continuously increase the proportion of [indiscernible]growth. For Q4 FY '18, the quantum of [indiscernible] growth was 87% of the total growth commissioned at Kochi as against 46% in the same quarter last year. Corresponding ratio for the full year was 81% versus 45% last year. Combined [indiscernible] ratios for Mumbai and Kochi are 67% for the quarter and 61% for the full year as against 40% and 43% for the corresponding figures last year, respectively. Our refineries throughput for this quarter stood at 7.85 million tons. This is about 30% higher than the corresponding quarter in the previous year. Full year throughput was 12% higher than last year at 28.54 million tons. Mumbai refinery's throughput was 40% higher than Q4 FY '17 which are lower based due to plant shutdown in March 2017. Kochi refinery's throughput was 22% higher than the comparable quarter due to incremental capacity brought in by IREP. Kochi's throughput at 4 MMT for the quarter is at 103% of the installed capacity of 16.5 MMT. Our weighted average GRM for the 2 refineries for this quarter stood at $6.5 per barrel as compared to $6.01 per barrel for the same quarter last year. For the full year, the GRM was $6.85 per barrel as against $5.26 per barrel last year. On the market front, we had an excellent year. Our growth rate for the year in domestic sales was around 9% from 37.68 million metric tons to 41.21 million metric tons. The growth was mainly led by petrol, around 8.9%; diesel, 5.6%; and LPG, 9.9%. Exports during the year were at 1.99 million tons as against 2.49 million tons, mainly due to reduction in production and export of [ inventory ] in Kochi. Our market share for '17/'18 among the PSUs in MS has been 28.72% versus 28.51% in 2016/'17. This is for the full year. In [indiscernible], our share has increased from 28.83% in '16/'17 to 29.05% in 2017/'18. We are now open for the question-and-answer round. And as this is a post results conference call, we request you to kindly restrict your questions to the quarterly and annual performance alone, please.
[Operator Instructions] The first question is from the line of Aishwarya Agarwal from Reliance Mutual Fund.
So can you help us with the marketing margin in this quarter? Because we observed the Q3 and the Q4 number, we see there is a significant growth in the 4Q number, though the marketing volume remains the same. And refining margin, you have disclosed any of these?
Marketing volumes have also increased. And in any case, as we have said, if you are talking about petrol and diesel, we have great margin for the year is around the same, INR 1.70, INR 1.75 per liter level.
So there is some setup in terms of we recovered lesser marketing income in the previous quarter, which have been recouped in this quarter?
As you keep on saying that we have to see the average margin over a period of time, which is 1 year that we are talking about now.
Is there any one-off income in this quarter, though?
There is no one-off income.
The next question is from the line of Nilesh Ghuge from HDFC Securities.
Yes. So my question is on Kochi refinery. During this quarter, our distillation unit ran about 103%. But what was the utilization of our daily copper unit or the daily [indiscernible] gas oil [indiscernible] processing unit?
Prasad, can you please answer?
Yes. On the secondary processing unit that also run matching with the 4 million ton of crude processed in that primary unit. The crude distillation unit, okay. All the units have the capability to run at 100% depending on the requirements during the quarter. All units are not at optimum capacity.
Okay. But Prasad, as you say 100%. But despite of that, if you look at the GRMs for Kochi refinery during this quarter, particularly, was just 4.96%. So despite of running at 100% capacity, is there any further scope for improvement in GRM from this level currently? Because if I compare the Mumbai refinery, the GRMs are higher than the Kochi refinery.
Yes, Prasad?
This -- you know that in the last 2 quarters, our objective was to run the unit at full capacity and ensure that there is hydraulic limits are -- nothing at design figures are being met. So this is the time immediately after the commissioning of the unit. So we are now going to optimize on the operational platform; improving the margins, including the right type of crude, right energy mixes, right fuel consumption, et cetera, which you are definitely going to see the margins from this year onwards. Last year, last end of the full year, it is commissioning. And fourth quarterly, we got to stabilize the operation. But we cannot say that it is the most optimized operation because immediately after the commissioning. So margins will come. We would -- depending on the crude and the cracks. We have demonstrated that refinery has all the capability to process any different type of crude, 100% high-sulfur heavy crude, 200% low-sulfur light crude. That capability has been established. Now we would optimize the crude and generate the margins.
Okay. And my second question is on domestic sales. Our domestic sales volume, if you'll compare the FY '18 versus '17, it has gone up by about 9.37% compared with domestic demand of 5.3%. But, sir, that demand particularly coming, if I compare, it's mostly from the others. The jump is significant there, about 33% year-on-year. But the -- if I look at the MS and HSD compared to BPCL and if I compare BPCL's number and the domestic demand number, it seems that we are losing market share. So I just want to know, in others, which are the products particularly where we saw a significant jump. Is it petcoke, [ beginning ] or any other products?
Yes. Others will obviously include petcoke and sulfur, but I do not know what you are trying to say. In methanol, we are losing market share. But I will request my colleague, Mr. Arun Singh, to just supplement that. But you are right, others will include petcoke and sulfur now that Kochi is running the broker unit. But about the MS, we'll give you the answer.
Just Jan, March '18, BPCL...
Full year, full year. I'm talking of full year. FY '18 vis-a-vis FY '17, sir.
Yes. If you are talking about FY, then first 2 quarter years, next 2 quarters, we are better. Not only we are growing better than others, we have also substantially made up the first 2 quarters loss, so last 2 quarters, [indiscernible] last 3 quarters. But Q1 was a problem. But Q2, Q3, Q4, all performance and Q4 being the best rewarding quarter.
And to supplement, for the year, since you are talking for the year, year-on-year growth for petrol for BPCL has been 8.9%. And in terms of the growth of HSE retail, it is 5.6%. So I'm not sure what exactly you are trying to...
But, sir, if I look at the BP's data, based on that, the consumption -- oil consumption in that consumption, the growth in HSD is more than 6.5%. And for petrol and MS, it is more than 10%.
This year, April, March, you're right, that goes without saying. But PSU growth was 8.08% on petrol, MS, [indiscernible]. As I said, BPCL has grown here, April, March at 8.86%. So BPCL has grown much better than the PSU growth rate. That is point number one. Second, I want to give you an import that from January onwards, the privates, now the base effect is gone, very small basin growth. That virtually, that's reasonable. So progress now from March onwards, if you estimated, that most likely it will be stable market because their base effect are [indiscernible] which was opened again. So -- and also now if you see last quarter or last month, last quarter, we have grown even better than private PSU put together.
[Operator Instructions] The next question is from [ Sumit Ahl ] from [ Smart Zone Capital ].
I would like to congratulate you on a fantastic performance on your marketing front, so that was extremely commendable in a very tough environment you are operating. Sir, my question is more to the fact that all the oil marketing companies, whether it's you, [indiscernible], HP, honestly, all have done very well on a marketing point of view. But obviously, the market's obviously concerned about something which we all don't know what. I think it is frankly doubt because all the stock's around 25%, 30%. The market is not being cognizant of the marketing segment. You know what we are doing because of the fact that all the stock prices are down 25%, 30%. So, sir, can you reassure the market basically and say that in an election year, which everyone knows it is -- that the marketing business will be stable and we will see a decent amount of growth on that front, sir?
All that we can say is that we can have the result of the performance. And as we see it, demand is pretty much stable. How the market, we are in terms of pricing and shares, it is not something that we are directly concerned. So we can only say that the performance of the refineries and on the marketing side has been good, and we expect that trend to continue.
Okay. Sir, I mean, I'll just ask you. I mean, on this context because it's one part [indiscernible] So if our marketing margins for current year and the year that have just gone by is about 1.7% or 1.8%., so do you expect that to maintain the way it is?
That's been the long-term average which we expect to continue.
Our next question is from the line of Amit Rustagi from UBS Securities.
Yes. Sir, could you give us a breakup of the income from other sources, which have been added the income from -- in the -- from JVs and associates?
That is -- Amit, you're asking for the other income, right?
No, no. The income from JVs and associates.
That's the dividend only, and we will get later...
Validation in the consolidated account.
Consolidated account.
Yes. I think it must be, I think, petrol and gas [indiscernible]
Yes. So just a minute. We'll give you the numbers. So you are asking for the numbers that's consolidated as compared to the standalone, correct?
Yes, yes. And in that, there is a specific line item that says income from joint ventures and associates, so share of profit of equity accounted investees, INR 1,288.88. It's there in the consolidated.
Amit, can I just give you this? I have the total 100% number with us. We will just give you the numbers. I'll share it with you immediately after the call.
And, sir, just coming to Kochi. I would like to ask, I think, on the performance side that you're -- how is the performance in the last 2 months, so April and May? So obviously, we have ran at 100% in Q4. But despite that, our GRMs are lower than Mumbai refinery, which is still a simple refinery. So what is the difference we are running at in the current quarter our Mumbai refinery? If we can get a picture on that.
Amit, I would not like to talk about the current quarter. But yes, I would ask Prasad Panicker to just broadly tell you what is the difference between the Mumbai...
Current quarter, yes. And what is the difference in the current quarter, Q1 over Q4? How we are going to achieve higher margins?
Well, I will not be talking, but I will ask him to -- since you made a mention about Mumbai refinery being a simple refinery, which is not the case. They have also done quite a bit over the last 1 year. I will request Prasad to just talk about that. I would refrain from talking anything about the current quarter.
Sure, sure. Sure, sir.
Anyway, the performance of Kochi refinery is continuing in April and May also in...
Prasad, we are not talking about current quarter. What he wants to know is between KR and Mumbai because Mumbai refinery is a simple refinery, as you will be aware they have done so much. If you can just briefly clarify what other things have been done in '17, '18 in Mumbai refinery also.
Yes. Mumbai refinery, actually, there are 2 reasons. Mumbai refinery has also got a very good complexity of around 6.5% to 7.5%. And there, liability operating and met a very good margin. It has to be looked in the other way around. The way that Kochi refinery margins are lower because, as I told earlier, it's because of the stabilization because it is, as I said, a massive commissioning activity happened last year. We had first stabilized our commission and establish the 100% capacity in Q3. And Q4 is the first quarter we were running at full capacity, so there is a lot of optimizations has to be done in this unit. That process is continuing. And then we would be able to make margins. And depending on so many other factors, you know about what type of crude is being processed in both refineries. Kochi is processing almost now 100% in Q4, very close to 90%, 92% rate of high sulfur. Mumbai is processing not much lower depending on the economics and configuration. So that is the reason. So it is not one-to-one comparison is possible because it is too early for Kochi to show its full potential because optimization time is required after the stabilization.
The next question is from the line of Vidyadhar Ginde from ICICI Securities.
Can you give us the GRM in Q4 FY '18 GRM and profit, Q4 FY '18 of Kochi and [ Mumbai ]?
You generally are asking for BORL and NRL, right?
Sorry. BORL and, yes...
So as far as BORL is concerned, the GRM for this quarter, fourth quarter is $11.90 per barrel, and their crude throughput was 1.67 million metric tons.
So -- and what about GRM -- or the profit for the full quarter?
Profit for the full quarter is around INR 200 crores, profit after tax. I'm talking...
Yes, yes, yes. This is the absolute number, not BORL shares?
It is the absolute number. We are talking about...
Yes, yes. Correct, correct. And what about FY '18 GRM and profit?
FY '18 full year, the GRM is $11.7 per barrel, and profit after tax is INR 984 crores. This is BOR, Bharat Oman Refineries. And as far as Numaligarh is concerned, without considering the excise benefit, it is about $13.7 per barrel for the quarter.
And including excise, what is it?
Around 34.
34, okay.
And $11.4 per barrel for the full year GRM.
And including excise?
And as far as their throughput is concerned, it is 2.81 million metric tons for the full year and 0.67 million metric tons for the quarter. And as far as the profit after tax is concerned, full year is INR 2,042; and for the quarter, INR 597.
Okay. My next question is basically are you seeing any sort of -- for the competition being less intense now because of the -- somewhat volatility in the market? Is that a factor, you think, the volatility in market and margins we've had over the last 5, 6 months? Do you think that is a factor?
No. Competition intensity remains the same. The loss of market share of PSU story is almost over.
And you are seeing [indiscernible] never lose market share?
Intensity, 0.1...
Yes, yes, yes, fair enough. But where I'm coming from is that is the environment also playing a role?
This company has also the mastered the art of looking at profit over a 1-year period instead of looking at the window of 3, 4 days.
So basically, adding your numbers, so just -- I think the numbers are [indiscernible] in Q3, which was a tough quarter, the competition did not start off. It continued with the business as usual, isn't it?
No, because Q3, the base effect came. If you can't grow perpetuity for abnormal numbers.
So no. I'm not talking of Q4. I'm talking of Q3, the quarter when margins were under pressure.
Q3 last year, if you remember...
Q3 FY -- which is early 1 quarter.
In Q3 up to onwards...
Historically, you're right. Last year was early 1 quarter where you did very well.
So that is a discount. Now the private story is almost coming to a stable state.
But are you -- can you say that for all private businesses? The impression seems to be there, maybe Reliance would you say is probably true that peak probably was the quarter in which they gave discount on diesel. But as far as putting in more petrol stations?
Yes. More petrol stations, but that is also 3,400. Their pipeline is also almost dried up.
So can we say that the throughput for petrol stations are reasonable? Or they cannot improve their throughput, especially Reliance? But the -- if somebody puts some more petrol stations than other, then that is probably mainly when growth can come but somewhat better growth. But the throughput for petrol station kind of that story is over?
Yes, correct.
The next question is from the line of Avadhoot Sabnis from CIMB.
Sir, what was the new investments made by BPCL standalone with JVs and the subsidiaries in FY '18, either in the form of additional equity or loans?
Yes. And just to give you a little background about [indiscernible] BPRL [indiscernible] share capital has now increased from INR 2,920 crores to INR 4,448 crores. That is as far as BPRL is concerned. In addition to that, there has been a loan given to BPRL, out of which -- despite what got converted into equity, there is a balance loan of around INR 700 crores. There has not been any additional inclusion into BORL or another for that matter. So essentially, what has [indiscernible] is only in the case of BPRL.
Okay. And I think the handout frankly didn't give us the total debt figure.
Debt figure, I can give you. The debt figure, there is hardly any change. In fact, there's about INR 100 crores or INR 200 crores lower than last year. I can give you the numbers straight away. As far as short-term debt is concerned, there is an increase of around INR 800 crores, but that is offset by around -- a decrease of around INR 700 crores long-term debt. So as you see, in the last year, we closed the year with INR 23,100 crores of debt, the same with INR 23,350 crores.
And is it possible to at least -- we have been repeatedly told that the year-end debt is higher because of the extra excise payments.
Yes.
Is it possible to give us any quantification of that extra payment? I mean, after the INR 23,350, how much will be just because of that extra excise payment?
No, no, no. This excise, whatever it is, basically what happens is every month, we pay on the seventh. Only thing in March, we are required to pay on 31st. So essentially, what happened there is a funding gap to that extent then we have to pay in the same month. Now that leads to an impact on the short-term borrowing. Now in the case of even last year, it was INR 7,200 crores. This time, we are at INR 8,000 crores in terms of the short-term debt, which is [indiscernible].
So if I were you compare it, say, just as of December outstanding, I mean, again, let me also qualify that this is not an answer to your question. But nevertheless, December end of the outstanding, as far as short-term debt goes, now it is INR 7,000 crores, which again will change in April because April, there is no more excise payment which is to be made for the full month
No, no. Exactly. I was wondering if you could quantify that extra excise payment, if it's possible at all.
An ongoing thing there is part of the working capital. For me to say that [indiscernible] 7 days in advance [indiscernible] it's difficult. Secondly, typically, the last quarter, the volumes are also higher. So the excise impact to actually quantify what is it for March is slightly difficult in terms of its impact on the short-term borrowing. But yes, the short-term borrowing will be slightly on the higher side as it is reflected by this number also.
The next question is from the line of [indiscernible] from HDFC Mutual Fund.
What would be the average API at Kochi have been in fiscal '17/'18? And is there a target or a number in mind that you have for fiscal '18/'19?
Prasad, API number is what
API number for '17/'18 for Kochi was 31.9. We cannot say that what is going to happen in '18/'19 because that all depends on the economic standard track and the [ brand differential ], but there is a sharpening in this. If you'll take '16/'17, it was around 39. It has come down to 31.9 in '17/'18.
And aspirationally, I mean, assuming, given current light heavies, where would you want this number to tend towards?
We have all the capability to process up to 39 to [ 30 ].
The next question is from the line of [ Faisal Gupta ] from [ Jet8 Securities ].
Sir, I just missed on the inventory gain figure for Q4.
Yes, one moment. We'll give you. So inventory gain for Q4 was INR 449 crores for the Jan to March quarter.
And for the full year?
Full year, it was INR 1,296 crores.
INR 1,296 crores. And, sir, what was the number for just Q1 of FY '18?
Q1?
I mean, in fact, sir, it would be good if you have it for Q1, too.
Yes. We can give it to you separately.
Okay, fine. And Q1, would it be possible?
Q1 of this year?
Yes, sir.
No, no. We are not talking about...
FY '18. Not this year, FY '18.
FY '18?
Yes, sir.
I'll give you the -- let me just -- just one moment. We'll give you separately.
Fine, sir. And ForEx loss, you mentioned was INR 122 crores for the quarter, right?
ForEx loss was INR 122 crores loss for the quarter.
And for the full year?
Full year, it was a loss of INR 9 crores.
And this would be bearing what other expense figures?
If it is a loss, it will be in other expenses.
The next question is from the line of Rohit Ahuja from BOB Capital.
Sir, one question on the -- just a follow-up question on many guys have asked for Kochi. So all -- what period of time do we see Kochi reaching its full potential, as you mentioned, of about the API being reduced to around 29?
Prasad?
Yes. The exact numbers for the time, we'll not be able to give. Because now the unit is stabilized in the Q4, so we had to optimize that. As I said, from almost 39 API, we have already in Q4. In the Q4, we operate at 31. So this process has to continue. And we need to find out, depending on the [indiscernible] differential and cracks. It is the optimum crude, and I may not be able to give an exact number, but this process is on, optimizing and integrating with the world refinery product. So the refinery get benefit out of. I repeat, that process is continuing. It may take -- may not be many -- maybe a couple of months or maybe 5, 6 months it would take for completing this activity, and then definitely we will get the full potential. But one thing we established that we have operated 1 quarter at 31.98, and we have operated fewer days at a lower API and higher sulfur and demonstrated that it is possible. Now it is depending on the economics, which is a better group, which is better going forward. Crude is very beneficial depending on the cracks as well as [indiscernible] differential. Then that is the process we would continue. But this energy integration of the new facility and the old refinery is a continuing process and may take a few more months.
Just -- so just continuing to that. So the acrylic plant at Kochi, when do you expect to commission that?
We are assuming now that mechanical completion, we are expecting by first quarter of this year. That is in the first quarter. That is Jan, March quarter of 2019 we are expecting mechanical completion. After that, it will take a few months normally for the commissioning activities.
So it is getting commissioned in the fourth quarter of this financial year.
And so for FY '20, we can expect complete utilization of all units there?
Yes, it will -- I mean, the mechanical completion is in January, and then it'd be -- hopefully, it would be first quarter of next year onwards.
Right. So secondly, on your -- as you were discussing on the marketing volumes, we have seen you perform very well on the ATF side and the other industrial product side in terms of significant outperforming the industry. Would that also mean that your marketing margins in those products could have been better than what -- how it has been last year?
Yes. We keep saying, these products which are...
Competent.
Competent. I mean, this is an ongoing business. So I don't have ready a number in terms of how much it's going to contribute, but definitely, yes, there will be growth in volumes. Their contribution would also be very big margins.
The kind of growth...
[Operator Instructions] The next question is from the line of Probal Sen from IDFC.
I just had one question again on Kochi. May I just know what kind of -- or how much of U.S. crude oil, if any, was imported overall in this year? And what's the capability of both of our refineries to accept U.S. crude in terms of how many tons of U.S. crude can we actually process given our configuration and our product deals?
Yes. Probal, both the refineries have done it, but I'll ask Prasad to just give you the details, U.S. crude. Prasad?
Yes. We actually -- both refineries have last year processed. Kochi processed almost 2 million barrels of U.S. crude, and Mumbai also processed almost equal in quantity. But it is not -- there is no limit for processing even 100% because the crude that we got is, on average, sulfur average, APA crude. So there is no limit. If it is economically viable, there would be crude in the U.S. which can use 100%. There is nothing -- that is not a configuration issue. U.S. crude so far, we actually obtained. There are different types of U.S. crude, but it is purely an economic decision.
I only asked because, obviously, there is quite a big differential that's opened up. I'm not necessarily saying that will sustain. But if the kind of discount that the WPI sustains against Brent, is it then probable that we will increase our import of U.S. crude substantially?
If economically viable, both of our refineries have got capability to maximize U.S. crudes.
Probal, you are right that the current levels of discount amounted is what Mr. Prasad Panicker is saying about the economics. Obviously, the difference will get factored in the selection process, but both have done U.S. crude during the year and therefore can process if they work out to be economical.
The next question is from the line of Amit Shah from BNP Paribas.
Just one question. Sorry to come back to Kochi again because last couple of quarters, we have been told that Kochi is going to deliver, Kochi will deliver, but it's not really come true. And it used to be the case, sorry. It was told that it will be at least a $2 increase in GRM that we are looking at once Kochi stabilizes. So now do we have high amount of faith that starting Q1, you will see refining margins improve? And, say, hypothetically if that kind of operating was implemented in Q4 itself, what would the margin have been? Is that something that you can share with us?
Amit, we have been consistently saying that Kochi will get to stabilization by the end of this quarter, which is what we have been saying throughout. And second is, as Prasad was saying, that they have just been -- stabilized the optimization. They are doing it, so they look forward to Kochi delivering on it. And secondly, the $2 that you're talking about is essentially what we have been talking about. It's that differential between the high-sulfur, low-sulfur crude after -- and thereafter factored in the higher operational costs that they will be having post the expansion. So, yes, I would like Prasad repeat whatever he has to answer earlier, but this is the situation as far as Kochi is concerned. So Prasad, again, on the issue of going forward, how do the investors see this? Kochi performing is in that question in essence.
Yes. In the last year...
Is there like a quarter that you can say that, okay, we can start assuming margins -- margin improvement relative to what margins are in that particular quarter, say, from second quarter onwards or third quarter onwards, whichever? Because I think there has just been a confusion with regard to that in the past couple of quarters, and that's kind of resulted in the so-called disappointment in the Kochi performance.
It's last quarter because, last year, actually I told like, as I said earlier, we were actually focusing on running the unit at full capacity that you can see in the first year of operation. Itself, in Q4, we have achieved almost 103% of capacity. So when we plan at higher capacity, it certainly generated more of margin, not in dollar per-barrel terms, in rupees growth terms. That was the first objective of last year to meet our market demand also. Now once the units are running at 100% capacity, the next is actually further energy integration and some of the optimization activities. That step-by-step procedures, we have started already. But as I earlier said, it may take another few more months, and you can definitely expect higher margins. There is no issue on that. And we have demonstrated our capability to operate at a different API and different sulfur, then we will now run our PIMS model, find out the optimum crude, and then we will deliver. There is no issue on that.
So probably second quarter of financial year '19 is a conservative sign to kind of assume that you have this slate in place.
The exact number quarter, I am not able to give because it is an ongoing process. This is going to be a step-by-step improvement versus going to happen.
The next question is from the line of Bhavin Gandhi from B&K Securities.
Sir, again, I have a question on Kochi itself. Could you just guide us as to how the OpEx has moved now that the refinery has stabilized for Kochi itself?
Let's see this one. The OpEx is roughly around $2.1, $2.2 per barrel. It is what we've been saying earlier. What it was, it will increase -- [ decrease ] commissioning of all this [indiscernible]. So it will be around $2.1, $2.2 per barrel.
Sure. And just one more thing, sir. Can you highlight what will be GST impact for FY '18 and the receivables on kero and LPG outstanding as of now?
The GST impact, I mean, if I were to just put both that -- what goes into the P&L and what would have been impacted in the balance sheet, the CapEx will be about INR 900 crores, out of which around INR 700, INR 750 will be the P&L impact. The balance will go into the CapEx, so that the realization will get adjusted. That is one. Secondly, as far as the dues from the government, I mean, we will be aligned with kerosene. At this point in time, it's around INR 3,600 -- INR 3,700 crores.
The next question is from the line of Pinakin Parekh from JP Morgan.
So I just wanted to understand that on the refining side, sir, given the way the oil prices have surged, what kind of cost increases, broadly on a ballpark per-barrel basis, can we see in financial year '19 if oil prices were to stay at $75 a barrel versus, let's say, FY '18?
Actually, any increase in the oil prices would reflect more in the working capital requirements. Beyond that, I'm not seeing any significant impact. Obviously, the way that cracks [indiscernible] on that, I don't know. But the immediate impact would be the slightly higher working capital requirements that will be there.
So OpEx per barrel should not materially change, sir?
Per barrel might not -- will not change significantly. There could be some impact on the fuel loss because the fuel -- own consumption of fuel. That will have an impact on the parts, and to that extent, the [indiscernible] could be impacted.
The next question is from the line of Aditya Suresh from Macquarie.
Yes. Two questions. So firstly, can you speak about any planned maintenance for the next 18 months? Second question, should we -- do you have any planned maintenance activity over the next 12 to 18 months? And second question is do you -- should we expect any meaningful changes to your product slate, again, over the next 12 to 18 months?
There will be one shutdown, which will be coming out in the Bharat Oman Refineries because they also woke up to the new -- 30% expansion. That should be somewhere in August. That is a planned shutdown will be there. There will also be a shutdown in Kochi because after the units have gone for about a year, generally there is a shutdown, just to see in terms of the vital parameters of how they are. So that is something which is likely to happen somewhere in November or December. So these are the 2 immediate impacts which will be there. There are some minor couple of units likely to be shut down in MR, but those are very, very -- 5 days, 7 days sort of thing. Again, one has already happened. The other one will happen in September. Different units, obviously. So these are the broader [indiscernible] scheduled maintenance shutdown confirmed. Insofar as product slate, already with the Kochi coming in, there's been a significant improvement as far as the product slate is concerned, which is also reflected in the amount of [indiscernible] oil going down. And therefore, there is a level of export. So increase in MS, LPG has already happened. So I think other than that, there should not be any significant change in the product slate.
The next question is from the line of Manikantha Garre from Axis Capital.
I just wanted to check with you, what are the [ fuel loss ] numbers for the refineries in Q4 and for the full year?
One second, we will give you. For the full year -- April and March, it's 7.01%. And last year, it was 6.03%.
Is it possible you can give us for Mumbai and Kochi, sir?
6.19% current year in Mumbai and 7.83%in Kochi.
And if I can squeeze in one more question. Can you please give an update on the news that came about in late March about BPCL kind that was taken GAIL are showing in terms of [indiscernible]. Is there anything going on, on that -- on GAIL? What are the options available?
There is nothing new at this point in time for us to add.
The next question is from the line of Vishnu Kumar from Spark Capital.
So this may be OpEx -- just need the OpEx cost for Mumbai and Kochi refinery and the CapEx for this year and next year [indiscernible].
This year, Ganesan speaking, that the numbers that we'll give you. Next year, we estimate that CapEx is around INR 7,400 crores next year.
That's only standalone or with the other -- consol?
It will include the upstream. But again, upstream -- again with the riders, it doesn't include any potential expenditure on Mozambique.
Okay. INR 7,400 crores.
Yes.
So again on OpEx cost?
OpEx, as I said, INR 9 in Kochi...
But Mumbai as well.
Yes. Mumbai is also somewhere around $2 per barrel.
So post expansion, there is actually no increase in the per-barrel OpEx cost in Kochi. Is that right?
No, no. There is an increase. Earlier, we used to be around $1.5, $1.6. I was maintaining those for $0.50 will go up. It has not gone up to $2.1, $2.2 per barrel.
Okay. So Kumar, now both are around $2 to $2.1?
Kumar, will be around $2 as well.
Okay. Sir, in the INR 7,400 crores would be a gap good estimate but refining, marketing and others?
Yes, yes. There's no -- projects would be improved, would be around INR 450 crores. In KR, it will be around INR 2,840 crores, of which we will be spending about INR 1,000 crores in MS project, about INR 1,700 crores in the petchem project. Marketing, we would be spending somewhere around INR 720 crores for the business. And the JV investments will be there. Upstream will also be there.
And how much would the upstream be there, just I couldn't hear the number earlier?
Around INR 800 crores to INR 1,000 crores.
The next question is from the line of Sabri Hazarika from Emkay Global.
Yes. I have got 2 questions. The first one is on your segment results. In the [ MP ], you have given the PBIT around INR 29.4 crores loss versus INR 144 crores loss Y-o-Y. So does it include [ Vencore ] and any of those recent acquisitions?
Just 1 minute, sir. I believe whatever the dividend which has been stated on [ Vencore ] will be included in this.
So that is part of standalone other income or that's part of consolidated?
Consolidated. That is in BPRL.
Okay. But that number is not that high. I mean, it should be higher than that, considering it's a big stake. So it's there or it's not there? I just wanted to confirm.
It is there. It is a [indiscernible] number. It is there. You receive dividend once in time 6 months, or so, so one round of dividend, whatever it is, it is included in the income.
Okay. And how much is the dividend amount?
It will be somewhere around $50 million for that 6 months.
$50 million for 6 months. And sir, one last thing. What about the Lower Zakum acquisition. How much -- what was the acquisition price for that stake in Abu Dhabi?
I'll just check that out. It is about, if I'm not mistaken, somewhere around $150 million or $160 million.
So that is the acquisition cost or [indiscernible]
That's the acquisition cost.
$150 million for your part of the stake, right?
I just need to check that out. And just off memory, I'm saying that. It's about $180 million.
The next question is from the line of Vidyadhar Ginde from ICICI Securities.
Two questions. One is on CGD. In this round of CGD bidding, are you like free to bid? Are you interested in that?
We will evaluate the opportunity, data economics and then decide on the strategy.
But you are looking at it?
Yes.
Not as if you're going to...
Yes. We have been there. We have looked at it. We have also -- and we will also look at the opportunity.
Okay. And the second question was regarding if, let's say, oil prices arise again. What do you see? Do you see that there is a possibility risk that the import duty on petrol and diesel is cut to 0 and maybe you are asked to pass on the benefits of inventory gains to the consumers?
I mean, it's purely hypothetical, so I wouldn't like to venture any answer on it.
The next question is from Amit Rustagi from UBS Securities.
Just on the marketing side. We have seen that, in Q4, we have grown our diesel volumes very strongly versus the industry. So what steps, if you could elaborate, we have taken in last 1 year to regain the market share and do better than the other PSUs?
Basically, we have started a project for [indiscernible] recall for our highway market. And most of issues, it is not -- most of initiatives, but 7, 8 big initiatives.
Yes, sir. What are those initiatives, if you can just brief on that? because -- and we are seeing that there is a significant improvement in the market share over the last 2 quarters. And I think, as you mentioned, that we are growing faster than the PSUs as well?
Yes. So basically, we started marketing our network instead of individual outlet. And with technology input and our customer relationship particularly went up, and it's further to go up now in the coming months and also, our flagship OSTS is that [indiscernible] we call it. This is a company called [indiscernible]. Phenomenally is doing phenomenal volumes now, so -- and the growth continues. So there's a couple of things, 3, 4 things which immediately contributed to this to our the focus.
Again, not particularly the discounts which we might be giving to gain the market share?
No, no. In fact, that -- there is no discount in retail as you may be knowing. It is basically loyalty rewards go, loyalty rewards have remained at the same level.
Okay. And the rural initiatives also has helped you like we had those...
Rural initiative is the focus this year. We started last year where numbers were small. This year, we are doing big numbers.
And, sir, just automation. How much have you achieved in our retail outlets? How many outlets have been automated?
We have roughly 10,700 outlets we have done. 3,000, we are commencing from July. Hopefully, by December end, we'll be through it all.
We will take the last question from the line of Saurabh Handa from Citigroup.
Sir, my question was related to Brazil. I think Petrobras has expressed interest in selling some of its stakes and some of the assets in the Sergipe-Alagoas basin and probably just bringing a partner. So is there something you can comment on that? Would you also be interested in bringing down your stake? Or do you think there's a lot of interest from foreign players in that basin? I mean, any color would be useful.
Saurabh, at this point in time, I'm not aware on this. But in any case, it's a very, very recent development. The upstream team will look at the opportunity and then take a call depending on how they would like to view that as a [indiscernible]. At this point in time, we don't have any specific information to share.
Are you not aware of -- they have put out a press release just talking about the sale of concessions and the basins and one of the blocks would be a block?
I'm aware, but I am just waiting for our upstream team to look at it and take a view. There is nothing at this point in time for us to share. That's what I'm saying.
Due to time constraints, that was the last question. I now hand the conference over to Mr. Harshavardhan Dole for closing comments.
On behalf of IIFL, I'd like to thank the entire senior management team of BPCL for their time and explaining the quarter gone by, and I'd also like to thank all the participants for logging on. Any last remarks would you like to make, Mr. Rajamani?
No. Thank you from us. That's it. Thank you very much.
Thanks all.
Ladies and gentlemen, on behalf of IIFL Capital Limited, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.
Thank you.