Bharat Petroleum Corporation Ltd
NSE:BPCL
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Bharat Petroleum Corporation Ltd
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Ladies and gentlemen, good day, and welcome to Bharat Petroleum Corporation Limited Q4 FY '21 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.
Thank you, moderator. Greetings, everyone. On behalf of IIFL Securities, I welcome you all for the fourth quarter FY '21 earnings call of BPCL. To discuss the performance in detail and share the outlook on operations in the subsequent quarters, we have the senior management team of BPCL. Today, we have Mr. Vijayagopal, Director of Finance; Mrs. Teresa Naidu, ED, Corporate Treasury; Mr. V.R.K. Gupta, CGM, Corporate Finance; Ms. Jenny C L, DGM, Pricing and Insurance; Mr. Girwar Bhattad, Senior Manager, Pricing and Insurance; and Mr. Piyush Borania, Senior Manager, Pricing and Insurance.I'd like to hand over the line to Piyush, who will make the opening remarks. And subsequent to which we can have the floor open for Q&A. Over to you, Piyush.
Thanks, Harsh. On behalf of the BPCL team, I welcome you one and all to this post Q4 results con call. Before we begin, I would like to mention that some of the statements that we would make during this con call may be forward-looking in nature, and we believe that the 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. Since this is quarterly results review, please restrict your questions to the Q4 results.I now request our Director of Finance, Mr. N. Vijayagopal, who is leading the BPCL team for this call, to make his opening remarks. Thank you and over to you, sir.
Thank you, Piyush. Good morning. I hope each of you and your family is keeping safe in these trying times. Welcome once again to our quarter 4 con call.Let me first talk about BPCL's efforts in our nation's valiant fight against COVID-19. In Mumbai and the west of the country, we are executing a project for supplying approximately 15 tonnes of oxygen per day to the Municipal Corporation of Greater Mumbai for the planned oxygen cylinder filling facility near refinery premises.In the south, the Kochi refinery is providing gaseous oxygen, power, water and infrastructure to a 500-bed makeshift COVID treatment center adjacent to its premises in Kerala. BPCL, along with our partner Air Products, is supplying around 3.5 tonnes per day of liquid oxygen to government hospitals in Kerala since April 2021.In the heart of the country, Bina, Madhya Pradesh, we are supplying water, oxygen and associated working plan for a 1,000-bed COVID hospital under construction near to the refinery.In UP and Haryana, we are providing cold chain equipment for vaccine. BPCL is supplying 10 numbers of oxygen PSA units to various hospitals across the country and also providing 3,000 oxygen cylinders as well as 1,000 oxygen concentrators. Apart from the above, BPCL is supporting through various welfare schemes support to district administrations in various locations, infrastructure to hospitals and COVID first-line treatment centers, supply of masks, ambulance facility, medicine and sanitation kits to the vulnerable sections of the society.Now coming to our results. I'm sure you have been able to go through our handout. I would like to highlight a few key points. A difficult year has drawn to a close with restrictions and social distancing norms in place. As a result, mobility was severely curtailed, resulting in low demand for transportation fuels. In spite of the above, BPCL MS sales in the quarter 4 of 2021 were higher by 9.89% as compared to Q4 of the last year. In the case of HSD, it was higher by 5.98% as compared to Q4 of the last year.Coming to FY '21/'22, while we see gradual abatement of the second wave of COVID-19 that affected demand for our major products in April and especially May, we anticipate Indian economy to grow at least 10% overall this year due to the base effect of 2021. Continued influence of COVID and limited public transport will affect personal transportation growth in first quarter of '21/'22. HSD will continue to be the main fuel choice for freight aided by Make in India initiatives and recovery in merchandise trade. BPCL has been aggressive in adopting emerging technologies to leverage opportunities even beyond the oil and gas space. In order to reduce the hassle of waiting time of CNG customers, we aim to commission about 800 CNG stations.Though domestic aviation sector had improved in quarter 4 of the last year, scheduled international flights are yet to commence and various restrictions are still in place around the world. Our ATF sales is at around 42% less as compared to Q4 of the previous year sales. However, there is an increase of 16% in the quarter 4 as compared to quarter 3 of the financial year 2021.With increasing vaccinations across the globe and improving business sentiment, the product cracks has improved in the quarter gone by. MS cracks has improved from an average of just $2.97 per barrel in quarter 3 to $5.66 in Q4. And HSD cracks from $3.34 per barrel to just over $5.78 per barrel. When we compare the Q4 to Q3 of the year 2021, the Indian basket of crude has increased from $45 to about $60. Indian rupee has appreciated from INR 74 to INR 73. BPCL GRM stood at $6.64 per barrel in Q4 as compared to $2.47 in Q3 and $0.75 per barrel in Q4 of the previous year. Product cracks have further improved in the first quarter of this year '21/'22 over Q4 of the just completed financial year.The refinery throughput, which was around 76% during Q2, increased to 105% of the nameplate capacity in Q3 and further to over 112% in Q4. Throughput for both our refineries was at 26.4 million metric tons for the year ended 31st March 2021. The refinery throughput have been aligned with demand in the ongoing quarter due to the impact of second wave of COVID. We have actually been producing about 86% to 87% of nameplate capacity in the month of May 2021. Distillate yield in the quarter 4 has improved to 85% compared to 84% in Q4 of the previous financial year.For quarter 4, BPCL had a record EBITDA of INR 13,715 crores, while it was a mere INR 552 crores in quarter 4 of the last year. EBITDA for Q3 stood at INR 5,401 crores. Profit after tax stood at INR 11,940 crores as compared to Q4 of last year at INR 1,361 crores and INR 2,778 crores for the third quarter of the current year. BPCL has been in adversity, but performed its better profit after tax of INR 19,042 crores for the year ended 31st March 2021.During Q4, BPCL has divested its holding in Numaligarh Refinery Limited after ensuring product security in the eastern region by executing a 15-year product supply agreement with NRL. And the consideration received net of taxes was about INR 7,982 crores. We have sold 12.6 crores equity shares for INR 5,250 crores through bulk deal. Further, we have accounted expenditure on ESPS scheme amounting to INR 941 crores, and the cost of VRS scheme amounted to INR 779 crores for the year. We also provided for impairment of investment in BPRL to the tune of INR 2,033 crores.Against the CapEx target of INR 9,000 crores due to restrictions in the first half of the previous year, we have expended INR 11,064 crores. During the quarter passed by, we have added 752 retail outlets as compared to 730 in Q3. Thus, we have added 2,444 outlets during the financial year. As on 31st March 2021, with these additions, BPCL has the second highest number of outlets within OMC space, and we also continue to hold the highest throughput per outlet among the OMCs. Two of the 3 major units of PDPP, that is acrylic acid and oxo-alcohol units and the energy unit of the MSBP at Kochi have been commissioned in the last quarter of the financial year.We also signed an SPA for acquiring 36.62% shares in BORL held by OQ SAOC, which will make BORL a wholly owned subsidiary of BPCL at a consideration of INR 2,399 crores. We expect to complete the formalities of getting the tax rate certificate and close the deal latest by 15th of June of 2021.Our borrowings as on 31st March 2021 is INR 26,315 crores, which has substantially decreased from the peak level of INR 41,875 crores at the end of March 2020. These are excluding the lease obligation amounting to INR 7,845 crores at the end of the current financial year.The debt-to-equity ratio at the end of Q4 is 0.48, down from the level of 0.60 at the end of Q3 and from a high level of 1.26 at the end of the last financial year. As of 31st March 2020, we had around INR 6,200 crores for outstanding sales to the Government of India, which has been steadily coming down. As on date, the dues amount to a mere INR 300 crores. There is no under-recovery for SKO PDS and minimal subsidy on LPG.I now invite questions and any clarifications you have. Thank you.
[Operator Instructions] The first question is from the line of Avadhoot Sabnis from InCred Capital.
My first question relates to staff cost. If I compare the third quarter and the fourth quarter staff cost, the numbers have gone up sharply from INR 870 crores in third quarter to INR 1,133 crores in the fourth quarter and the VRS charges in both quarters nearly the same. So can you just explain the reason for the rise? That's the first part of the question.Second thing relating to staff cost. If I exclude the VRS, then the full year cost is around INR 3,700 crores. If you could provide us with some sort of guidance in terms of what is the sustainable cost FY '22? Is it going to be up or down relative to INR 3,700 crores? That's my first question.
Yes. One of the reasons why the staff cost in the year 2021 has gone up is because we had captured the impact of the VRS about INR 779 crores for the whole year. Q3, Q4 is mainly because we have made a modification in one of our welfare schemes, which has resulted in a onetime additional impact of about INR 350 crores. So since we have actually successfully implemented a VRS scheme in the year 2021, we do not anticipate any major increase in the staff cost in the year '21/'22 and going forward, barring the normal increases in the staff cost. We have reduced the number of our employees to a number of about 9,120 as we close the year.
So if I take the staff cost FY '21, excluding the VRS, which is INR 3,700 crores, ballpark, it should be in that range in FY '22 as well?
Yes.
Second question, sir, is on the, can you provide some details on the consolidated debt of BPCL? I mean, including the lease liabilities. I think for stand-alone was INR 34,000 crores. What is the similar number for consolidated? And ideally, if you could provide from granularity in terms of how much is in BPRL and stuff like that?
So the consolidated amount of debt at group level is around INR 42,000 crores. And stand-alone, I'm sure you would have already got the figure from the handout, approximately INR 26,000 crores. And that excludes the lease amount of around INR 7,840 crores.
INR 26,000 crores excluded this.
INR 42,000 crores doesn't include the lease liability, right? The lease liability other than in stand-alone as well?
Correct. Correct. Yes. You are right.
Okay. And this wouldn't include BORL, right? So what will be the BORL debt?
That we don't have right now. We'll be happy to answer you offline.
[Operator Instructions] The next question is from the line of Amit Rustagi from UBS Securities.
Congratulations for a wonderful performance. Sir, my 2 questions relate to that, first, relating to the treasury stock. We have taken a decision to dispose of the treasury stock in the last quarter. But why we are left with the some portion of equity still? So if there is any further decision to be taken here? And if you can explain the logic behind this?
So all that I can tell you is that we have been able to successfully divest a major part of our treasury share. A portion remains, and as we have been consistently telling, our view is that BPCL share price has not reached its potential. So we are waiting for the opportunity, if possible, to dispose of the balance or the best to retain with us.
Okay. Got it. Got it, sir. So the second question relates to the recent issue of giving a promotership and selling a stake in IGL and Petronet. So could you explain what is the legal position with respect to promotership in these 2 companies? Can this be just given up by selling some shares or there is more procedure to be followed like -- because I think you must be a part of some shareholders' agreement in these 2 companies.
Yes. I can tell you that we have no intention to pare down our stakes which we hold in either IGL or PLL. There would be a need for open offer based on the existing SEBI regulations. We are working closely with the Government of India, and our interests are aligned to ensure how we can avoid a requirement of the open offer as well as the requirement if the solution is to pare down our stake, how to avoid that because we have a feeling, together with the Government of India, that any paring down of the stakes which we hold in these companies will be value destructive for BPCL. So I can confirm to you that we have no intention to dilute our stake in either of the 2 companies. We're working with the government and authorities to how to ensure that the value of BPCL is protected.
Okay, sir. Got it, sir. And sir, just one more question, if you allow me. What is the valuation of the BORL which we have valued? And what are the principles being applied in valuing this, buying this stake? Like how much debt and how much projected EBITDA may be and what is the equity value?
We have already announced the numbers at which we are buying that stake, which Oman is holding. It is INR 2,400 crores for a 36.62% stake, which Oman hold today in BORL. We have reached understanding with them. A written agreement is there, binding agreement. We are only waiting for a tax rate certificate, which has to come from the tax authorities. Once that is available, we are going to close the deal. And I'm expecting, as I was mentioning, this should happen latest by the 15th of June. So valuation is available in the public domain now.
The next question is from the line of Vidyadhar from ICICI Securities.
Am I audible?
Yes, sir. You can go ahead.
Yes. So my first question was on this, your petrochemicals project where you have said you commissioned a couple of units in the fourth quarter of '21. So if you could give us some guidance on what kind of utilization you expect from the petrochemical units in FY '22? Will it be profitable in FY '22 and which could be -- when do you expect it to stabilize? And when it stabilizes, what could be the sort of contribution to EBITDA from this project?
So in PDPP projects, 2 units have been commissioned during the last quarter and stabilization is going on. The third unit commissioning activities are going on, for which the licensor based in Japan are helping us over video. It is being done virtually. So over the second half of the year, the production should be ramped up. And on an annual basis, we are expecting a GRM contribution of around $1.
This is on stabilization or in the current year?
Post stabilization.
Okay. So once the unit stabilizes, contribute $1 or that kind of profitability?
Yes.
Okay. And my second question is on the, what is the profitability and GRM of Numaligarh and BORL in Q4 and full year?
Numaligarh, GRM is $45 per barrel because you have an excise duty benefit. And what was the second question?
BORL.
BORL, the GRM for the fourth quarter is $8.
And what is the profit/loss of both?
Profit up to March 25 for NRL is around INR 900 crores. And for BORL for the quarter is INR 144 crores.
This INR 900 crores NRL is just Q4?
Q4.
Until 25th of March.
Yes. Yes. And what is the full year number?
Full year is around INR 3,000 crores.
INR 3,048 crores.
Okay. And what about, I didn't catch the number for BORL. If you could give me the numbers?
BORL's quarter is INR 144 crores. That is Q4.
And full year?
It is a loss of INR 76 crores.
Okay. Okay. And do you see the change of ownership resulting in change of fortune in BORL? Do you think that was going to help?
It will help. It will help improve the bottom line.
The next question is from the line of Varatharajan Sivasankaran from Antique Limited.
A couple of questions. On Bina refinery, do you still have the VAT benefit, of excess benefit going on? How many years it is standing? And secondly, the impairment, is it pertaining to Mozambique or any other asset as well?
Yes. Your question was on BORL sales tax benefit. It will continue. We are in dialogue with the Madhya Pradesh government. We have already availed the benefit on CST completely. On the VAT benefit, we have already availed a substantial portion, almost INR 1,300 crores remain to be availed as a deferment, which will continue.The question on BPRL impairment is on account of various factors, including some of the blocks we have decided to relinquish. And another reason is that the value in use of the other blocks which are in service, which is going to give benefits to us in the future is, today, at the current outlook, does not appear to warrant keeping that at that carrying cost. So we have recognized the impairment for the year. And depending on the outlook of prices that impairment provision to that extent can be also reversed if the situation improves.
Would it be possible for you to give us any kind of an idea about how much of this would be Mozambique?
No. There is nothing from Mozambique.
The next question is from the line of Nitin Tiwari from Yes Securities.
Thanks for giving me the opportunity, but my questions are answered. Thank you.
The next question is from the line of Sabri Hazarika from Emkay Global.
So I have 2 questions. First is on Bina refinery. So from what we know, Bina refinery stake, although for Oman Oil it is 36%, which you have stated, but if we adjust for the warrants, et cetera, then I think the effective stake of BPCL is close to 80%. So is it the right way to assess that fee on this 20% or 18%, 19% stake of Oman Oil, this INR 2,400 crore valuation has been done or is there some other way it would improve?
No, actually, 36.62%, when we buy, it becomes 100% subsidiary of Bharat Petroleum. Nobody else have share capital in the company. Government of Madhya Pradesh has warrants, which can convert to 0.63% of the diluted share capital, which we are also in discussions with them, and we have agreed to buy the stake. So our idea is to actually buy and keep this as a 100% subsidiary as a prelude to merger of the company BPCL, which has got a tremendous value in this potential for BPCL. Since you know, 36.62% crores value, it's a question of finding out, grossing it to 100% to find the value, which we have considered for this valuation.
Including the warrants which are outstanding?
Yes.
Okay. And secondly, this BORL is having a product shipment cost, which is part of the OpEx. I think unlike another refineries, the products which are coming from BORL, I think the cost has to be borne by BORL itself rather than BPCL. So that is continuing right now, right? And post-merger, will there be any change of it? And what was the OpEx for the refinery in FY '21?
I can answer the first part that is, it is a policy of the oil marketing companies that the stand-alone refineries will bear the cost of any irrecoverable taxes for transportation of the finished products. It is not unique to BORL. So that will continue until such time the merger happens, then there is no CST.
Yes. Regarding the refinery OpEx of BORL, particularly for Q4, it was INR 174 crores.
Okay. So INR 174 crores for BORL. No, I was not asking about the irrecoverable taxes. I was asking about the freight from the refinery to the marketing division.
This question, we'll take it offline.
Okay. And lastly, you mentioned that all the benefits, both CST as well as VAT, both of them are, that is continuing. I mean, it was there in FY '21 also. And FY '22 also, you are expecting it to continue and this INR 1,300 crore of deferment annually, which you were talking about, right?
No. I don't understand that question. I would like to please clarify that once BORL is part of BPCL, there is no question of any netback adjustment and such things. Today, we have 2 different companies. There is a methodology to buy the products from them and then onwards sell this. Once BORL becomes BPCL, there is no question of anything that we are going to pay to BORL. It becomes my product. I sell my product just as the way I'm selling products which are produced in Mumbai refinery or Kochi refinery. So there will be no element other than the cost of crude oil and conversion cost as my cost and the realization that I get from the market.
Right. And the tax benefits will continue, you mentioned, right? It does not expire.
The tax benefits, which has been promised by the government of Madhya Pradesh for the remaining period in terms of deferment, will continue.
And that is still how long?
There is a value limit of INR 3,750 crores deferment, and they have given INR 2,300 crores already. So balance is INR 1,400 crores. That will continue.
The next question is from the line of Mayur Patel from IIFL Asset Management.
Yes. Can you just inform about the status of the petchem projects, the commissioning and a little bit on the economics also, please?
So as we had mentioned earlier, the PDPP project, 2 units, it contains 3 major units. Two units is already commissioned in Q4 of last year. And the third unit, acrylic acid unit, which has Japanese licenses, the commissioning activities are going on, sorry, acrylic. So post-commissioning, stabilization is going on for the first 2 units, and we'll be ramping up production only in the second half of the year. And the expected GRM on a yearly basis would be around $1.
And the 2 commissioned units are already producing and generating operating profit?
As I said, it is still under stabilization stage.
So say in 6 months' time when everything is up and running, what kind of operating profits you expect from this entire complex of petchem?
On an annual basis, we expect a GRM of $1.
GRM additional $1. That's the incremental value creation coming out of this complex, right?
Yes.
The next question is from the line of Probal Sen from Centrum Broking.
Two questions. One was with respect to CapEx. Obviously, some part of the plants may be subject to whatever happens to divestment. But barring that, what are the projects that have already approved and in process? If you can give some details of what will happen in FY '22 and '23?
So CapEx for financial year '21/'22 is planned something around INR 12,000 crores, all right. And I can give you a broad breakup of it. Like for refinery, it would be somewhere around INR 3,000 crores. For petchem, it would be around INR 1,000 crores. For marketing, it would be something around INR 4,000 crores. While remaining for equity investments, it would be around INR 1,300 crores for BPRL. And the remaining, around INR 1,800 crores would be other projects.
So that was my question. So within refinery and petchem, if you can just give a very broad list of which are the projects to be undertaken in the INR 3,000 crores and INR 1,000 crores?
In refinery, we have 2 projects ongoing in Mumbai, that is KHT and LOBS revamp project. The total cost of these 2 projects is around INR 1,200 crores. Then in Kochi, we have the MSBP project balance commissioning and other activities going on. The total cost of MSBP is INR 3,289 crores.
And just to add further, there would be some expenditure on polyols unit in KR and also a 2G bioethanol refinery in Orissa.
2G bioethanol. Okay. So the other question was with respect to the impairment, it was just answered, there has been no impairment taken in Area 1 project in Mozambique. Can you give us a sense of what you have heard from the main executors, which is I think Total, about the status of the force majeure and what is happening on the ground?
Look, we have already given a detailed press statement. And as of now, the activities on the ground has been stopped due to the violence, which has happened there. But the other activities, engineering side is happening outside Mozambique, which is continuing. So we have no reasons to believe that this project will be delayed inordinately. It is possible that there could be a delay from 6 months to 1 year for completion of this project at this stage.
Six months to 1 year delay. And that's the reason we have not taken any impairment as of now?
Yes. We don't find any reduction in value on account of this delay.
Okay. Sir, last question, if I may. You talked about, I think, 800 CNG stations planned, if I'm not mistaken. Can you tell us about the investment required? And what is the total CGD investment you're looking to do in the next 2 years?
We don't have exact number for the expenditure per se on these 800 outlets. However, we have targeted to put approximately 800 and 629 we have already in commission. Other than that, with respect to CGD, we had commissioned CNG sales and CNG sales in Roop Nagar. Further to that, in Rohtak, we had commissioned CNG sales. And this quarter in Ahmednagar and Aurangabad also we had commissioned CNG sales. So approximately 36 number of retail outlets we have already put which are specifically for this gas per se.
The next question is from the line of S. Ramesh from Nirmal Bang.
Congratulations on the good results. The first question is, if you look at the consolidated balance sheet, you have not provided for minority interest, whereas the P&L you have provided. So can we assume that the FY '21 balance sheet you have given is excluding NRL in total? And secondly, when can we expect the pro forma P&L excluding NRL, so that we can reconcile our FY '21 numbers excluding NRL and we do the forecast?
Yes. Actually, NRL, that ceased to be a subsidiary from 26th March onwards. That was the reason there is no minority interest in the consolidated balance sheet because you know other subsidiaries which are having NCA other than NRL. But in respect of P&L, definitely, up to 25th March subsidiary, the P&L-related components have been consolidated in the P&L. So in case if you want any excluding NRL, what will be the profitability, maybe in the Q1, you can have that comparative.
Okay. So the balance sheet you have given, we can assume it's completely excluding the discontinued business?
Right. Right.
Without NRL?
Right.
Okay. The second part is now when you talk about the petrochemical business, you have given a figure of $1 per barrel as the GRM upside. So does it include the spreads on the petrochemical products or is it only on the propylene value addition?
It is at the refinery transfer pricing.
Yes. So you will also get some spreads on the acrylic acid and the oxo-alcohol. So what is the kind of spreads you are expecting for that because that will also add to your bottom line, right?
Yes. We won't be able to give a number on the marketing margins right now.
The next question is from the line of Pinakin Parekh from JPMorgan.
My 2 questions, sir, recently, there were media reports that the financial due diligence related to the privatization has started. So sir, can you confirm if the data room has been opened up and management has been meeting with the potential bidders related to privatization?And my second question is on IGL and Petronet. Assuming, say, we were not to give any waiver and BPCL management does not want to sell down the stake, then does it mean that the privatization would be off the table because it's very difficult to see any potential buyer putting up billions of dollars in open offers for those 2 companies where it would not have any operational control?
Okay. First question on the data room. I can confirm that we have opened a virtual data room on the 10th of April. And the qualified interested parties are seeing those data rooms and a number of queries have come from them. We are in the process of answering those queries.Second question on IGL, I've already clarified and I will repeat what I have told is that we have no intention to sell down our stake in IGL, PLL. So other questions are hypothetical at this stage. Please wait for how we are going to solve this.
The next question is from the line of Manikantha Garre from Axis Capital.
Congratulations on a good set of numbers. Sir, first question is, what is the total equity investment in Mozambique LNG project so far?
The project cost is around $20 billion.
He's asking our investment made so far in Mozambique.
We'll answer offline. But during the last financial year, we have added an equity infusion of INR 1,156 crores in BPRL.
Okay. So we don't have a number specifically for Mozambique LNG, which has been done so far?
Yes.
Okay. I'll check with you on that later, sir. And the second question is maybe can you please...
Mozambique numbers are, actually we have spent on Mozambique project at BPRL USD 1.2 billion, amounting to INR 9,000 crores so far.
Okay. So just some clarity, sir, the project cost is $20 billion, 10% is the stake and 2:1 is the debt-to-equity ratio, then our equity contribution should be less than $1 billion, right, sir?
No. It is actually, $20 billion is the development expenditure. We had spent quite an amount of money on the exploration of Mozambique to reach this level. So when we talk about $20 billion, it is after exploration and appraisal of the wells. We are going for a development phase of a certain portion of the Mozambique.Mozambique holds a huge volume of gas of about 75 TCF. We are actually first taking a portion of this for development. That development calls for putting up 2 LNG trains, cost is $20 billion. $20 billion means 10% of that will be $2 billion, but we have certain arrangement to carry the government-owned companies there. So it's a slightly complicated thing. So you won't be able to get exactly straightforward answers. I am only telling you now that we have invested in Mozambique USD 1.2 billion. Going forward for the development part of that, our share is 10%. It will be, we'll spend about $2.4 billion, over and above this.And going forward, for subsequent trains, it will be more and more money investments because it's a huge project. But the second, after second train is put up, first and second, the subsequent developments will come out of the cash flows which can come from the first and second trains.
Understood. So basically, just to clarify, on top of $1.2 billion, we are going to invest $2.4 billion more. Is that what you're saying?
Yes.
Understood. The second question, sir, your peers have started highlighting renewables, biofuels and EV charging stations, wanted to check your progress there or this is something that we should wait for the divestment to happen?
So with respect EV charging stations and all, BPCL has until now set up around 40 EV charging stations and some 7 battery swapping stations in different cities. But these numbers are small because we are doing it mainly to accumulate learnings because we believe that MS and HSD are here to stay for quite some time. Accordingly, our investment is pretty minuscule to just accumulate learnings and implement. And I think we've already given, shared the numbers of CNG outlets, 629 outlets we have commissioned. And one 2G ethanol refinery also we are putting up, that is in Orissa.
Just to add to that, we'll be putting up 800 CNG stations in the future.
When we say CNG stations, it's addition to existing retail outlets. So therefore, they're getting a feeling that we are investing huge amounts. It is not that. We have existing retail outlets. We'll be adding CNG stations in that outlet. It's not that we are going to put up a new outlet for CNG on its own. So the investment may not be that high.
So this 800 is on top of 629. Is that right?
Yes.
Yes. Yes. Yes.
And the last question is, if you can break up the FY '21 CapEx?
So you want the actual CapEx one or do you want the in line CapEx?
No. '21 CapEx.
FY '21 CapEx by segment.
So FY '21 CapEx, approximately some INR 3,000 crores we have done in refinery, some INR 1,000 crores in petchem, some INR 5,000 crores in marketing. And in BPRL, we have done equity investment of some INR 1,150 crores. And the remaining projects, including pipeline, is around INR 1,100 crores. So total comes to some INR 11,064 crores.
The next question is from the line of Yogesh Patil from Reliance Securities.
In yesterday's press release note, you mentioned that NRL is sold at a consideration of INR 9,875 crore. However, gains arising from the sale of equity share is INR 9,422 crore. So gains are lesser by close to INR 450 crore. Is that because of tax part or some other accounting adjustment?
That is the cost we paid in investment. See, INR 9,876 crores is the realization. INR 400 crores is the cost which we paid for getting that stake in NRL way back in 1993, '94. Tax is about INR 2,000 crores, capital gains tax. So the net realization is INR 7,876 crores. We had to reduce the cost of investment, that is INR 400 crores.
Okay. So the tax part was close to INR 2,000 crore and the net realization is close to INR 7,000 crore.
INR 7,876 crores minus INR 400 crores.
Okay. And the second question relates to dividend side. A bumper dividend declared of INR 58 per share, including a special dividend of INR 35 per share. So is that a right interpretation, the remaining part of INR 23 per share was the normal part of that bumper dividend? And going forward, can we expect that INR 23 will continue with the interim dividend also?
We cannot assure any investor of a continued certain rupees per share of dividend because dividend is a function of profits. Since we had a record profit this year, we have given INR 21 to interim dividend plus INR 23 as a balanced portion of the normal profits. So if the profit remains at these levels sans NRL, you can expect a similar dividend payout because we have been having the practice of handsomely rewarding the shareholders. NRL divestment is unlikely to happen in the future. Therefore, that INR 35, which represents roughly the NRL divestment, will not happen. Rest of it depends on the profit because my profit after NRL is excluded is about INR 11,000 crores PAT. So if my PAT next year is INR 11,000 crores, you can expect a similar dividend amount. But I'm not assuring that because dividend is a function of various things, including the CapEx requirement and other matters. So we have a practice of rewarding the investors richly, and that will continue. I cannot put a number to the next year's dividend at this stage.
The next question is from the line of Amit Shah from BNP Paribas.
Just one question, I think I missed it. Could you just tell me the FY '22 CapEx plan, please?
Yes. FY '22 CapEx plan, total comes to around INR 12,000 crores, of which refinery is around, I'll give you broad figures. Refinery is around INR 3,000 crores. Petchem is around INR 1,000 crores. Marketing is around INR 4,000 crores. BPRL investment is around INR 1,300 crores. Gas is around INR 550 crores and the remaining INR 1,300 crores is for the others.
The next question is from the line of Vishnu Kumar from Spark Capital.
So if you could comment on the cracks of some of the heavies, especially base oil and lubricants during the quarter, was it abnormally high? And if you could also tell about the current trends?
No. We won't give the cracks on products which are not sensitive. That's a policy.
Okay. But at least directionally, it was much better, at least, sir. Is that the right assessment?
Yes. Yes.
Okay. And generally on the other products, how are you seeing the trends there?
Our crack spreads on MS and HSD for the fourth quarter was the best in the last financial year. And we are seeing that crack spread is further improving in the first quarter of the year '21/'22.
Got it. Sir, in terms of the data rooms which you had opened, would this include even the BPRL also? My question is more in terms of, you've been making a lot of organizational changes, and you have been divesting some assets. So would BPRL also be something that you would be considering to carve out at certain point in time or would the incoming investor would also be looking for BPRL as well?
We have not divested any of our assets, excepting our holding in Numaligarh refinery, which was part of the original decision of the Government of India announced in November of 2020 when they announced their intention to sell their stake, which was in BPCL. We have not done any divestment. And the CCEA decision is selling of Bharat Petroleum less the shares which BPCL holds in NRL. So that position continues. And therefore, BPRL data is part of the data room.
The next question is from the line of Maulik Patel from Equirus Securities.
Just to continue to the earlier question, you mentioned that the data room was open on 10th of April, and you are in the process to answer their questions. Once this particular procedure is over, what is next after that? Can you just help us determine the closing guideline?
Yes. On the time lines, the question only can be answered by the DIPAM. What I understand the next steps, as I understand, is that once they are ready with the data room and they've studied the data, they have expressed their desire to have an intensive discussion with the senior management of BPCL. And due to the regulatory issues since the account closing was going on and the Board meeting to declare results was there, we are told that we are not ready until 28th of May due to the SEBI regulations.So they will, actually, if they desire, they can have a discussion with people like us. And then they have also expressed their desire to have a physical inspection of our major facilities. So this is actually held up now because of the travel restrictions. International flights are not allowed to come into India. And once these 2 are over, it is time for them to start with the financial bid. And then thereafter follows DIPAM procedures how to evaluate the bids and to get the necessary approvals, reserve price fixation and so forth before a SPA is signed. Incidentally, the draft has been approved by the CGD, which is the highest decision-making body in the country for this matter, has already been shared with the qualified interested parties.
The next question is from the line of Sumeet Rohra from Smartsun Capital.
Sir, congratulations on a fantastic set of results in a very challenging and a tough year. Sir, I would really wish BPCL and all its families to please stay safe in these tough and challenging times. Sir, coming now to my questions. So if I heard correctly, you said that you commissioned 2,400 outlets. So sir, what is the total outlets we have currently? And sir, similarly, for the current financial year, are you also looking to commission the same outlets? Sir, secondly, my question was on the, if you can please help me understand on the CNG outlet. So sir, if you have about 18,000 outlets, so can we commission CNG outlets also on the existing outlets we have, sir?
Yes. First is that we have commissioned 2,444 outlets in this financial year, taking the total outlets we have to 18,637. So as of 31st March, we have 18,637. We are not having a practice of actually adding to the outlet just for the sake of it. So we have already added about 4,000 outlets in the last 2 years, 1,447 outlets in the year '19/'20 and 2,444 this year. We will increase, but not to this extent in the year '21/'22. That's the first part.Secondly, your question apparently is that, do we have intention or capability to add a CNG facility in all the outlets? Answer is no. Because CNG is available only in certain parts of the country. Government is trying to expand that foothold of the CNG availability in cities, but it is essentially an urban phenomenon. So it is there in Mumbai. It is there in Pune. It is there in Delhi. It is there in Bangalore. It is there in Chennai and in cities which are also expanding and certain other places like Jageshwar and other places. Wherever there is CNG availability and a pipeline connectivity only, there is a possibility of having CNG outlets, right? So it is not possible to have CNG outlets in all the outlets we have. So we are moving in stages. As she explained, we have only done 600-plus. We are having intention to add 800 in the next year. So it is a long journey ahead.
Okay. And sir, if I may ask, I have one question more. Can I ask, sir?
Yes, please.
Okay. Sir, basically, I mean, on the point which you made prior to this was on the physical inspection of the assets. So sir, if you can just help us vaguely understand, I mean, could this be, because it's anyone's guess, right? I mean, international flights have not opened for the last 1 year for all countries. So if you can, sir, broadly help us understand the time lines of this. I mean, just a vague indication of time because you know how the current scenario is.
No. That has been clarified by one of the Finance installments. So I don't want to put a time line on this because this process is not driven by Bharat Petroleum. The disinvestment of the BPCL stake is driven by Government of India. And the department which is responsible for it is DIPAM. You can direct this question to Mr. Tuhin Pandey.
The next question is from the line of Jinesh Gandhi.
Sir, my question, if you can just help me out in understanding. So basically, with respect to the submission of financial bid. So that would be, say, in how many days after the physical inspection because any light to shed on that?
Depends on the way the investors see and the time lines which DIPAM is going to ask them. So we don't handle that job as I repeated.
Yes. But as per your experience with that, so right now there is no specific time lines, say, X number of days after that. That is not the intent?
There a lot of people, like the Finance Minister and the DIPAM Secretary already is in the public domain. So I don't want to comment or make any further statements to add to the confusion which you are trying to create.
Okay. I mean, the interpretation I wanted in terms of the setting up of the reserve price, which is a process which will be after the submission of the financial bids and before the opening of the financial bids. So I mean, what is your opinion on that? I mean, I believe it should have been like before the submission of the financial bid.
There is a process available under DIPAM guideline for submission of financial bids for arriving at the reserve price and authorities who have to approve all these processes, it is available in the public domain in the DIPAM website.
The next question is from the line of Iqbal Khan from Edelweiss.
Congratulations for the very good set of results. Sir, a couple of bookkeeping questions, as several other questions have already been answered. Sir, could you please help me with the refinery run rate in this quarter and prior quarter and what it would be April and May. I think probably you have said 85% to 90%. So I just wanted that. And the GRM at the Numaligarh refinery and BORL on previous quarter and for the full year? Sorry if I have missed this, if you've already spoken about this.
Can you repeat the first part of the question?
The run rate, the overall refinery utilization in this quarter and the prior quarter and for the month of April and May, as you see the refinery run rate. Because of the lockdown, I think the refinery run rates have lowered across the OMCs. So just wondering what number for BPCL. And the second one is regarding the GRM of Numaligarh and BORL quarterly and full year?
So the refinery run rate for last quarter was 112% of the nameplate capacity. And Q3, it was around 96%. As on date, because of the severe wave of second wave of COVID, it is currently around 86%. And on the...
And on the GRM front, for BORL, the GRM for the quarter is $8.3, while for NRL for the quarter is $45.12, which is including the excise duty benefit.
Okay. And for the full year basis?
For the full year 2021 for BORL, it is $6.2, while for NRL it is $37.23, again, which is including the excise duty benefit.
The next question is from the line of Mayank Maheshwari from Morgan Stanley.
Sir, I had 2 questions. One was related to the adjusted GRM of Kochi, which has been now below even Mumbai refinery. So I just wanted to understand the additional $1 per barrel that we get out of petchem, can Kochi actually come back to the full level of profitability that we were thinking at the time of the upgrade?
For the full, whatever plans we had at the time of upgrade, for that to be received, you should have a Brent-Dubai differential of over $2. So currently, Brent-Dubai differential is around $1. So it will take some more time. Otherwise, physical, the refinery throughput is always about nameplate capacity. Of course, due to the severe restrictions and COVID, nameplate capacity has been moderated in line with the demand.
So is it fair to say that at least I think we can get Kochi refinery's GRM adjusted numbers at least towards the Mumbai refinery level at some point of time?
Yes. Yes, of course. That is our desire. In fact, compared to Mumbai refinery, Kochi is the more modern refinery, more complexity. We have got all the flexibilities inbuilt already. It's a modern refinery. It should deliver more margins because we invested quite a lot of amount there. But the prices are ultimately determining the profits of the refinery, global prices. The price levels are now not favorably inclined to the high sulfur crude oil processing, which will be more money from Kochi refinery because they are both a petchem and -- they're not only petchem facility, they also got delayed coker facility of a high capacity and several other features. So that is, we are waiting for the better times to come for Kochi.
Sir, my second question was related to the marketing side. If you can just tell us of how has been your market share on gasoline, diesel kind of spend having versus the other OMCs?
So for Jan to March quarter, our market share is around 24%. And the growth over quarter of last year is, MS was 9.89%, HSD is around 6%.
We'll take the last question from the line of Ajay Bodke, an individual investor.
Congratulations for posting very good set of numbers. Sir, do the bidders have the option to add members to their consortium? If yes, at what stage? I think until what stage can they add members to the consortium? And secondly, although you've answered this question in reply to one of the previous questions on BPRL. The Government of India has a policy of focusing on energy security for the country. And BPCL has, over the years, built a large number of upstream assets all over the world. So in view of that, is there a likelihood of the government asking BPCL to consider divestment of the upstream assets before the privatization happens? I know you've answered that the CCEA only has allowed the divestment of Numaligarh as per the current approval that they have, but has there been any correspondence between the government and the management on the upstream assets?
I'll answer the last portion of the question, which is much more simpler. I can confirm to you that there is no correspondence from the Government of India to BPCL for actually asking whether we have an interest in divesting of BPRL before divestment happens. It is very unlikely that it will happen because it is too late in the day for making changes in the terms and conditions under which bids have been invited. I am not ruling out any possibilities because I am not deciding the sale because sale is a matter of decision taken by the Government of India. There is no intention as far as we know at this stage of the Government of India to make any further divestment of any of the portfolios and assets and JVs in which BPCL has interest.Now to the other question which you raised. It's a matter which is handled only by DIPAM. We don't enter the tendering and the modifications in the PIM. And the flexibility given to the bidders to add and the time lines given for them to add to the consortium are all inside in the PIM document. And we do not get access to how the government deals with the bidders who have already been identified and qualified.
Okay. Lastly, have the bidders sought any clarification from the government or the management on allowing a free hand on pricing of petro products in view of the intermittent, how do I put it, intervention by the government whenever different state elections are announced and also in case of provision of subsidized LPG cylinders?
Yes. Actually, bidders have a right to ask the government these questions because we don't have answers for questions like this because these are in the policy domain of the Government of India. Two things I can tell as general answers, which may or may not satisfy you. One is that the subsidy for LPG is almost disappeared now. Government has been taking a very serious and series of steps to increase the prices of LPG domestic gradually over the last couple of years. From the end of May of 2020, there is no subsidy which is there on the domestic LPG as well. So the question of subsidy on LPG may not be a question that will be bothering the potential bidders.Secondly, their apprehension of government's intervention or government's signals to government companies on pricing of the products at later stages and all are concerns which are legitimate. But then once the BPCL, which has got, though she mentioned 24.5% overall market share, we have about 29% market share in transportation fuels like MS and HSD, which is going to increase to some 31% in the next 1 or 2 years. With private sector holding 12% share, BPCL holding 31% share, with a 43% free market, it will be difficult for the government to continue to give signals to government companies on the pricing of what they call a sensitive petroleum product because the government policy is free pricing.The policy is very clear. Government policy is very clear that the government does not influence the pricing. But we have a policy and we have a principle, and we have a duty to ensure that increases in the prices are not passed on to the consumers as it happens when the volatility is very high because it has a potential to affect the consumers in India. We have also a duty to protect their interests. In a pandemic like last time, our marketing margins were low. Since the normalcy was restored, we were able to recoup the losses, and we had a decent marketing margin for the whole of the year 2021.So we have a commercial way of understanding the pulse of the consumers as well as the need to ensure that we have a decent margin because we're investing heavily in the industry. So commercial considerations will ensure that the so-called intervention of the Government of India at certain times are reduced considerably. They have a legitimate right to ask the questions. I don't know whether they have asked these questions. They have a right to ask, and they have a right to get a response from the Government of India. We are not privy to that.
And just a last thought, I think the Honorable Director of Finance in his reply to CNBC today morning did indicate that the process of privatization should get wrapped up by December, with a delay at most of 1 quarter. So is that the stance that the company management still holds?
That is Director of Finance's assessment of the current situation. It may or may not hold.
Thank you. That was the last question. I would now like to hand the conference over to Mr. Harshavardhan Dole. Sir, you may go ahead, please.
Thank you. On behalf of IIFL Securities, I sincerely thank BPCL management for giving us an opportunity to host the call, really appreciate this sir. Thank you very much.
Thank you. Thanks a lot.
Thank you so much.
Thank you.