Hindustan Petroleum Corp Ltd
NSE:HINDPETRO
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Hindustan Petroleum Corp Ltd
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Dear all, I'm your host, Amit Rustagi from UB Securities, and I welcome all the participants on this call. I wish everybody is keeping safe along with their families. I would now like to welcome HPCL management team, led by Shri MK Surana, Chairman and Managing Director; and Shri Rajneesh Narang, CFO and Executive Director; along with other senior management members, it's our pleasure to host HPCL on this call. Now I would like to hand over the call to Mr. Surana for his opening remarks. Sir, over to you, please.
Thanks, Amit, and good afternoon to everyone who has joined this call, and thanks for your time and your interest in HPCL on a continuous basis. I'm Surana, I'm C&MD HPCL. I'm joined with Mr. Rajneesh Narang, who is ED Corporate Finance and CFO of the company. Just to start the thing, the year '21, '22, the first quarter, again, started with the second wave of coronavirus, which did force lockdown in some parts of the country. Of course, the lockdown of this quarter was different than the same quarter last year. In the sense, last year was a complete lockdown, industrial activities were completely stopped. This time, the severity was more in terms of the casualties, but the lockdown was not complete and the activities were not completely stopped. The interstate travel was also not completely stopped. In this background, the demand of petroleum products in this quarter was better than what it was in the first quarter of last year. And as a result, petrol showed a growth of almost 36%, HSD 22%. LPG has always been higher even last year also, but still, it showed a further growth of around 2.6%. ATF showed a growth of more than 100% compared to last year 2020 first quarter. But if you compare to quarter -- [ 2019 ] first quarter, there was still a gap with the pre-pandemic demand to the extent of around 14% to 20% on a quarter basis. But come July, the growth and recovery was sharper and petrol crossed the pre-pandemic demand. And in July month of 2021, the petrol demand was almost 5% above July 2019. Our HSD was lower by most 8.9%. ATF was around 45% lower than 2019 July demand. So we can say that the petrol demand already reached the pre-pandemic point and showed a positive growth. HSD is still around 9% shorter than the pre-pandemic demand. On the crack side compared to Q1 of last year to the Q1 of this year, there was an improvement on cracks on both MS, HSD. MS cracks the average last year was around $0.50, and this quarter was almost $8.50. HSD was last quarter -- last year's first quarter was around $3.18 and this year first quarter was around $5. So there was a general improvement in cracks of MS and HSD. As far as crude prices are concerned, that significantly increased. Last year, first quarter, it was around $29 average and this year first quarter, it was around $69 average. And the exchange rate was -- rupee was slightly appreciating, but there was volatility in the rupee exchange rate throughout the quarter. Now the increased crude prices improved cracks had a positive and the negative impact in the sense that the positive cracks did help on the GRS. The higher crude price had a negative impact in terms of higher cost of the fuel, which we burn to run the refinery. As far as HPCL is concerned, I think I -- you may be -- some of you may be aware that we took a shutdown for our Mumbai refinery in the first quarter on 1st of April itself, it was planned. for the major revamp and hookup of our Mumbai refinery expansion plan. And even though there was a setup corona but it was a planned activity and we decided ahead with it. And I'm glad that we have completed that part. In spite of the challenges, which we faced due to corona -- second wave of corona. But the persistent efforts of all the team members, they could complete the shutdown part and the revamp part ensuring the safety of the workers. And I'm happy to share that at one point of time, we were having around 15,000 labor at site. But in Mumbai refinery shutdown, we did not have any casualty because of corona pandemic. And for that, we took several efforts to ensure the safety of the workers. We also used some of the new modern techniques to complete the project, especially because the oxygen became in short supply. The industrial use of oxygen was prohibited and oxygen is an essential commodity for the construction work, especially for welding, cutting, et cetera. We used some of the new techniques, including the waterjet cutting, to ensure that the jobs continue. And the -- as of date, the revamper and the hookup jobs are completed and the units are in pre-commissioning mode, and we hope to commission the Mumbai refinery expansion units in this month itself. It will add 2 million metric tons of capacity to Mumbai refinery it may take around 1.5 months, 2 months to reach to the full capacity because whenever you do a complex revamp of this nature, I can mention this is one of the most complex revamp, which any refinery would have done but we have successfully completed it. And so the ramp-up is normally done consciously and cautiously. And that's what I'm mentioning, but we may achieve the full capacity even earlier than that. On the Visakh refinery side we -- our Visakh refinery expansion in it, jobs are progressed well, even in spite of the corona though there was some reduction in the labor at the site, but still the job continued with more efficiency, some new techniques. And I am -- and we are hoping to complete all the VRMP units in this financial year itself, except the bottom upgradation, which will be completing in the -- by the end of the calendar year '22. With this, VRMP project will also get completed. Our other 3 cross-country pipeline projects that is Vijayawada Dharmapuri pipeline, Hassan Cherlapalli pipeline, and Barmer Palanpur pipeline are running ahead of schedule, and we hope to complete those -- these 3 projects also in the financial year 2023. As far as Rajasthan refinery is concerned, their progress is also quite good. We have already started receiving the main equipment. In fact, around 5 long lead items and the major critical equipment has already been dispatched 2 weeks back and will be reaching site. Our main CDU column is completed and will be getting erected soon. It was constructed at site because of the -- because the large size, it would not have been possible to transport it. and other activities are also going on, progressing there.Now as far as the current year results are concerned, we made a PAT of INR 1,795 crores. And with a sales of -- the total market sale of 8.83 million metric tons, we showed a growth of 15.9%. The refinery throughput after accounting for the shutdown, which we have taken from Mumbai refinery, where first 45 days, it was the full battery unit shutdown. And then one of the trend was started and the second trend where there was a major event were continued to be the shutdown and we keep under the precommissioning mode now. So the refinery throughput was around 2.51 million tonnes. And that was -- so the Visakh refinery operated at around 98% of its capacity and Mumbai refinery after they start up on an average had a 25% capacity utilization for the quarter. Considering the full 45-day shutdown for the full unit and 45 days operation of the -- one of the unit in the latter part of the quarter. As far as market volumes are concerned, we had a growth in all the major projects and rather we did better than the industry as far as MS, HSD and LPG is concerned. In LPG, in Q1, we had the highest ever Q1 sales of LPG. We did suffer a little bit on industrial products like lubes and bitumen, which are directly supplied from the refineries and because the refinery had taken a shutdown, so there we had reduction in the volume. But that once the refinery started because the lube part of the refinery started in the second quarter of the -- second half of the quarter with one trend starting. And now that will be picked up further now. As far as the profit is concerned, it was INR 1,795 crores, PAT with the EBITDA of INR 3,555 crores. And this was a bit lesser than the last year first quarter, mainly because of the 3, 4 main reasons: One thing is that, as I mentioned, that we did take a shutdown -- planned shutdown of the refinery. Second, some of the industrial products, which we directly supply from the refineries. There, we had to curtail the supplies. Third part, we had a exchange rate loss because in the last year, we had an exchange rate gain of INR 49 crores, while this quarter, we had an exchange rate loss of INR 71 crores. Also because of the -- some of the oil bonds we have, there we had an MTM INR 160 crores last year, which we didn't have this time. So last year, first quarter, we had an MTM gain of INR 160 crores, which we didn't have this time. And rest is the overall scenario of the crude pricing. And of course, the fuel and loss, which I mentioned that if the food prices are going up, then the fuel cost will be higher. For the throughput, which we ran -- we had a GRM of 3.300, and which was as compared to $0.04 per barrel in the same quarter last year. On the other part of the things, we commissioned another 142 new retail outlets. So the total retail outlet network of HPCL holds at 18,776. CNG facilities were added to another 50 retail outlets, with this now 724 retail outlets have got CNG facilities. Almost 25% of our total HPCL network is solarized. It works on solar power now. There is around more than 5,000 retail outlets. Then we have commissioned a new POL depot at Hisar in Haryana, along with a 10-kilometer dedicated step of pipeline from Raman Mandi Bahadurgarh pipeline, which will facilitate further optimization of logistic costs. As of today, 87 retail outlets have got EV charging facilities. And you might have read that we have some agreements and MOUs with our partners for providing the EV charging facilities. We recently had an agreement with Tata Power to provide end-to-end charging facilities at -- initially at around 100 outlet on a pilot basis and depending on the experience we will accelerate it further. This is not an exclusive arrangement, but it's an important one, because depending on the strength of various partners and the models with different partners are adopting whether it is a battery setting, whether it is a fast charger, it is slow charger, et cetera. We have got some other partners also. But Tata Power agreement is a significant one in this direction. I'm also happy to share that in this quarter, HPCL has done the highest amount of ethanol blending. We achieved 9.3% blending of ethanol in MS. And we've also taken to the ethanol blended petrol, we were the first to do even in the far-flung areas like Ladakh. One more thing I wish to share with you that HPCL R&D center has recently received its 100th patent. So this R&D center was commissioned in 2016. And in a short span of 5 years, they have received as of today, 102 patents. So that was a significant landmark for the young scientist team, which is there for concentrating on innovation and R&D in technologies, processes, catalysts, chemical. And out of that, around 22 products and technologies have already been demonstrated and deployed on a commercial basis, which are also being used by our own refineries and some other refineries and some of the products have been used by other people as well. And before I end my part of the initial narration during this COVID times, we also supported the efforts to strengthen the health care infrastructure, facilitate oxygen supplies providing oxygen PSA plant and also provide the vaccine storage facilities in the state of Punjab, Maharashtra, Chandigarh, Rajasthan because the vaccine transportation and storage itself also needs some special equipments. So HPCL did provide this equipment and facilitated that vaccine transportation and storage in these 4 states. So with this, I open the session for the further questions, which the participants may have. Thank you so much.
[Operator Instructions] The first question is from the line of Probal Sen from Centrum Broking.
And thank you very much for the opportunity, sir. Am I audible?
Yes, please go ahead.
Sir, just on the refinery capacity expansions that you spoke about. In terms of the 2 million additional capacity in Mumbai and now the Visakh capacity, by end of FY'22, sir, then effectively, what sort of capacity will we be working with, at the both refineries? Visakh and Mumbai?
See Mumbai should be working at 9.5 million tonnes per annum. And Visakh is supposed to be 15 million tonnes, but by this financial year end, we should be around 13 million metric tonne per annum.
Because the bottom upgradation will still be there, which will add another couple of...
The bottom upgradation may help to the extent of around 0.8 million to 1 million tonne. But I'm also factoring in some ramp-up timing. So while -- so I'm just trying to be conscious of that.
And is it possible to put a number on -- you would have obviously worked out your internal targets, sir. Is it possible to get a range of the refining margin benefits that one is hoping for, from these very -- as you said, fairly complicated and high end -- yes.
As far as Mumbai refinery expansion is concerned, it will bring additional volumes and energy efficiency because we had the 3 vacuum distillation units in refinery earlier and that are being replaced -- now there will be only 2. So 2 has been combined into 1, so that brings the energy efficiency. And the third parties, because we have -- along with this, we have also created a new tank form where we installed 47 new tankages in an additional space, which we had taken as a part of this project, which is completed. So what happens is this increases the total parcel size which we pump in the pipeline, cross-country pipeline. So that gives more efficiency, lesser quality give away in the interfaces. So -- and the third part, which is not immediate tangible benefit we wish to say, but it has created a space for the further things to be done in Mumbai refinery in future, if you want to because Mumbai refinery was always congested. So we have removed some of the tankages and even marketing terminal activities, which was there in the refinery to an adjacent plot, which we purchased. So it will bring the energy efficiency. It will bring down the quality giveaway in the interfaces because in the same pipeline, we send the product one after the other, there is always an interface. So larger is the parcel size, the lesser is that interface. And the capacity, these are the 3 benefits which is coming in Mumbai refinery. As far as Visakh refinery is concerned, after the full unit is commissioned, including the bottom upgradation, it will become a zero fuel [indiscernible] refinery. So there has been no bottoms actually, everything will be distillate. And capacity of course will go from 8.33 million to 15 million tonnes. And it will help the hydrocracker and the -- again, there, you have 3 distillation units. So now the new -- one of the things which the new CDU/VDU, which we installed is a 9 million metric tonnes, so one of the 1.5 million metric tonne capacity will get out. That's why -- while the installed new unit is 9 million tonnes, but we are telling the increase in the capacity only to 6.88 million tonnes from 8.33 million to 15 million tonnes. So these are the overall benefit. Visakh refinery, GRM should go to double digit after the whole project is completed, including the bottom upgradation.
Right. And sir, from a near-term perspective, given that this is more of a housekeeping question for Q2, since the commissioning of Mumbai's shutdown and the restart is expected in this month. So even for Q2, sir, is it fair to assume that around 50%, 60% will be the effective utilization?
No, because two things will happen. One thing is the unit which will be starting now. Let's say, in this month itself, already in the pre-commissioning more actually steaming and all has already been started in that. So we are expecting to cut the crude somewhere in the middle of this month, maybe by 20th of August itself, we should be having the unit started in this month. And so we have a 1.5 month of run with a higher capacity. And the second part of the unit is already running. So we should be able to have a reasonable run and as far as Visakh is concerned, we already had a turnaround of one of the CDU unit also, which you might have heard that we had a small fire incident in one of -- we're taking that opportunity. We also completed the turnaround of that unit. So after the turnaround, we get a better run rate. So it should be possible to reasonably manage the throughputs with substantial extent. But while -- it's a investment for the future, I would say that unless you take the shutdown, we can't complete this project and unless we complete the project, we cannot reach the benefit of this.
That's okay, sir. I just wanted to get a sense of what -- how the ramp-up would play out. So got it. I mean it's going to be definitely higher and closer to normal level gradually over the next two quarters from what I can guess.
Correct. So by the end of the year, we'll make up. But when we start the unit, we need to be conscious of not hurrying up too much because it's to be done properly and consciously and in the meticulous manners.
[Operator Instructions] The next question is from the line of S. Ramesh from Nirmal Bang.
So the first part is, in terms of your operating performance, you reported [indiscernible] product yield. So what kind of product yield can we work with here once the shutdown in this part in normal operation, say, for the rest of the year?
As far as Visakh refinery is concerned, the distillate will be the same for the time being unless the Visakh refinery units are getting completed in the latter part of this year. And once that is done there, what I mentioned to you is that a significant change will come after the bottom upgradation unit get completed. But before that, because hydrocracker will come. So definitely, there will be improvement in the distillate yields on that. So normal distillate, which we get is -- so around 75% distillate yields we should get on this -- after the restart. And after the Visakh refinery unit starts, it should be a further improvement. And after the bottom upgradation comes, you should see another 5% to 7% distillate yield. So after bottom Upgradation commission, almost 90% yield we should get -- distillate yield we should get.
Okay. And the second thing is apart from the yield improvement, how do you see the light-heavy differentials moving, say, in the coming months, given that you have some traction there. We expect that to also add to our delta recurring market?
So right now, the delta of lighter heavy itself has been a subjective matter sometimes the low sulfur is better than high sulfur. And ultimately, it is the total GPW, which governs the type of the crude diet. As far as Mumbai refinery is concerned, we are not expecting much change in the crude diet with this expansion also, and we will continue to operate, except that we will have certain flexibility because we can hydrotreat VDU also. So that will give more flexibility to us in Mumbai. As far as Visakh is concerned, we will be capable of processing 100% high-sulfur crude after VRMP is completed. So in Visakh site, that flexibility will come, where 100% high-sulfur fleet can also be processed.
The next question is from the line of Nitin Tiwari from Yes Securities. We'll take the next question from the line of Somaiah from Spark Capital.
A couple of questions.
Sir, we can't hear you. The audio is very low. Please increase the volume of your device.
Yes. Is it better now?
Yes, sir.
First question pertains to the CapEx plans. Can you just elaborate a bit on the CapEx plans for '22 and '23 and also the segment-wise breakup and specifically on the equity contribution of Barmer?
Yes. So our CapEx plan for the current year is INR 14,500 crores. And as of June, we have already completed INR 3,000 crores. Out of this INR 3,000 crores, it includes the equity contribution, which we have made for various JVs or subsidiaries. So around INR 1,800 crores is for the projects which are being handled on HPCL balance sheet and around INR 1,200 crores is equity contribution for various JVs, which includes Barmer also. So in this year, we will have a -- we may be contributing another INR 1,000 crores to Barmer which is included in the INR 14,500 crores total CapEx. Does it answer your question?
Yes. So just a follow-up on this. So post is -- what would be the remaining Barmer contribution, sir, after the INR 1,000 crores for this year?
See, Barmer, we have I think already contributed 4,000, 3,800, so in Barmer, I think we have already -- by now, we already contributed around INR 3,800 crores, and we will be around INR 6,000 crores or so to be contributed -- INR 7,000 crores approximately over a period of next 2 years.
Can you -- I mean, can you share the inventory gain, if possible, between refining and marketing, the overall inventory gain and what is included in the refining margin in the marketing segment?
Actually, we have been doing it in the past. And last time I did mention to you that actually it is creating more confusion in the mind of the analysts because what was happening was that people were just deducting the inventory gains or losses from the total margin and saying that the margin is GRMs have reduced or increased. But actually, it doesn't happen that way. So it is a combination of too many factors, and we were looking on account factor. Now in a normal course, it doesn't make much of a difference because more or less, the prices are not having that much of volatility. Then last year, March, the first time we observed the impact of it and the crude prices fell suddenly, and April when it gone up suddenly. At that time, we realized that by just having an automatic addition or subtraction of this and trying to say this is the core GRM, it is neither represented, neither correct, and that's why last year, initially, we have not said when somebody asked, I did reply also, and I did mention that, this time because somebody has asked I'm telling. But otherwise, we will probably like not to be confusing the people with this inventory gain, that's the number one. The second point is in the volatile market, the inventory and gain loss is not just a default item. The companies can take a conscious call to decide the timing of the crude, when the prices are cheaper and they can take a technical call. Now that may lead to inventory gains and along with this their hedging positions or the risk management if they have. And therefore, the companies can have an operational and tactical calls on this to hold the inventories, to process especially when the demand changes because of the various bouts of corona which we have. So we always have a choice not to process, not to buy the crude. We had the choice to buy the crude and not process. We have the choice to process the crude and hold the products. So there are various possibilities like this. And there -- if there is a normal business and then you said that this inventory gain or loss that's one thing. But in this time, I think the inventory gain loss is a combination of many factors, including the calls of the company. And therefore, for the time being, probably I will try to refer -- not that we don't have the figure to tell you honestly, we have the figures. But because the narration has to be -- needs a lot more understanding on this issue. So therefore, I would refrain from making a specific number on that. But suffice to say that, we did have the inventory gain, which were -- there is -- we had an exchange rate loss, which I gave you the number of.
The next question is from the line of Nitin Tiwari from Yes Securities.
Sir, my question is related to refining profitability. So more importantly from the cost perspective. So what are -- what is the cost range for us in dollar per barrel terms -- in terms of in Mumbai and Visakh refinery? And how did it stand in this quarter when we had lower throughput? And how do you foresee that panning out when our expansion has completed for both the refineries and bottom upgradation has also picked. So this is the first question.
So I think a part of this question, I did answer just a little while back probably because of your connectivity, I think you might have missed it, but I'll just repeat it briefly that we are expecting to complete the Mumbai refinery expansion commissioning in this month. And we hope to stabilize it in the next 1 to 2 months. That is a bit conservative estimate on that. So -- but the units jobs are completed and units are already in the pre-commissioning mode. This will bring the capacity. This will bring the energy efficiency because we are replacing. We are putting up 1 bigger vacuum distillation unit in place of 2 smaller units which we had. And the third parties, I mentioned that we have installed new tank form of around 47 tanks, which gives us more flexibility in terms of logistics, in terms of parcel size, which we pump in our cross-country pipeline from Mumbai to Solapur. And the quality give away which happens in the interface and also managing the round number of the products which we set in the pipeline. And that is a important parameter. So these are the benefits, which we are expecting it to come from this, apart from the volume. As far as Visakh refinery is concerned, it will become a 0 bottom refinery after the commissioning of the bottom upgradation. And we will have the flexibility to process 100% of the high sulfur crude. We will have the distillate yield of 90% plus, and we'll have GRM of double digit on Visakh refinery once the commission of the unit. In addition to that, more energy efficiency because we will have the bigger units in place of the smaller unit. So these are the benefits that are likely from these 2 expansion projects, Visakh refinery expansion project, which we are hoping to complete in this financial year, except the bottom upgradation in it, which will be commissioned by the end of the calendar year '22 because it will come sequentially after commissioning the primary unit.
So that's very helpful, sir, but my question was more from the perspective of -- put down in terms of, say, some indicative numbers that -- what is the cost that we have that are incurring in Mumbai and Visakh on dollar per barrel basis and how it can move like qualitatively going ahead when your sanction get completed? And also particularly from this quarter's perspective, did we see a cost increase because our throughput was lower and the cost we have taken are shutdown. So how did that cost change in this quarter. So that was the question.
Yes. So basically, we do not exactly share this small, small -- so details the numbers. But I can tell you in a broad sense, because the gross margins are increasing because of the price of petrol and diesel are going up. As far as the operating costs are concerned, there is a small fraction of the total cost because 95% of the cost is crude cost in the refinery. So the core GRM when they are going up because of the better price on petrol and diesel and especially diesel, which forms a substantial component of the Indian refinery setup. So we are expecting the GRMs to go up. And we've just seen also in the first quarter, it is $3.30 compared to $0.04 last year, first quarter. Now in this one component which acts negatively is the higher crude cost, which affects the fuel and loss component. So the -- in the refinery, you normally have 7% to 8% of the fuel and loss. So if the crude price is higher, that higher price gets affected on that also. But otherwise, we are expecting the GRMs to improve and that will help in improving the NRM also because even though we are increasing the unit side, we are not increasing any manpower or so because it is either a replacement of the existing unit with a bigger size or a revamp of an existing unit by debottlenecking it. So there is no increase in the manpower side. We are not expecting any increase in the chemical catalyst consumption. It maybe -- the power consumption maybe slightly higher because of the throughput, but there is a variable cost. And the steam cost may be higher, which is also variable cost. So overall, it should improve the net margin.
So that's very helpful. And my second question is around ethanol blending that you mentioned that the blending at the rate of 9.3%. I suppose, government of India has a very aggressive target of reaching 20% blending by 2025. So in that backdrop, what are your thoughts that -- how achievable is that target? That is one. And second, what are your thoughts on managing the logistics because if that target has to be met, a lot of vehicles would still not be compliant with E20. So how do we foresee that we are going to cater to both the vehicle parts, which will be there in terms of vehicles which are compatible with E20 and vehicle which are not compatible with E20?
So recently, there is a road map, which has been announced, which was discussed between the Ministry of Petroleum, Ministry of Road and Surface Transport, the CM, which is the industry body for the automobile manufacturers, various stakeholder, ethanol manufacturers and there is a roadmap has been drawn up, where up to 25 E10 is there then from 25 onwards, E20 becomes compulsory. And from now to E25, you will have a certain portion of E10 and E20 available. But E10 will become compulsory after within a year or so. Now the availability of ethanol wise, the various efforts which the government has taken is one of the thing is allowing the manufacture of ethanol from multiple raw material, earlier it was basically molasses. Now you can make it out of grains, maize, rice, surplus rice, rotten grains, et cetera, also. So based on that, the grain-based 1G refineries have been allowed, there were certain interest subvention and the incentives are also there. As far as the ethanol uptake is concerned, the OMCs have already said that we can take the products if somebody is making ethanol, and there is a prize also -- getting -- is declared. And there is already a mechanism to pick up the -- the third thing which government has done is allowing the interstate movement of ethanol without permission. So those type of policy changes have already been bought up. Now as far as the automobiles are concerned, what I understand is ethane are up to E12. I think the current vehicles can take. And once E10 becomes compulsory, the vehicles can be tuned, which will include the efficiency also. For E20, there are some changes are required, and which automobile industries have said that in terms of certain dust creation and certain [ rings ], et cetera, they need certain changes that's what they are mentioning, and they are preparing themselves to do that. As far as the E20 vehicle can take E10, but whether E10 vehicle can take E20, there will already -- the automobile industry is making an arrangements for that. But the road map has been developed in consultation with the automobile manufacturers, ethanol manufacturers and the concern ministry.
Right, sir. So it will impact our logistics as well, right, because we won't be able to like have a consistent sort of fuel mix across all our plates. Some outlets will have to make pure gasoline. Some outlets will have to make E10. Some outlets, will have to make E20 available.
No, no. One minute, one minute. The ethanol blending is done on the run. So we have -- we already have got -- created the facilities to help the ethanol there is a separate tank in the retail outlet or the terminal or the depot. And there, it is mixed. So it is not that at the depot we are manufacturing ethanol, the ethanol is manufactured somewhere, we buy the ethanol, then it is mixed on the run. So what did I said? You will have a tank in the retail outlet or in the terminal and the blended thing goes. But for the transportation there are further things also have been augmented like you can have the complete mix -- ethanol mix petrol has been transported to rail through pipelines. So those efforts also have been tried successfully. So as far as logistics is concerned, our industry is geared to handle that.
The next question is from the line of Varatharajan Sivasankaran from Antique Limited.
So with the increase in steel prices as well as rupee depreciation, do you see a significant jump in our CapEx cost across projects?
See, as far as Mumbai and Visakh is concerned, they are already in the completion stage where most of the equipment have already been received. And because we are doing the projects on the LSTK mode, so we are not buying the product now, and those people have already bought or tied up the supplies, Similarly, in the -- now as far as Rajasthan is concerned, from the time the cost is to be estimate to the extent, there are also LSTK mode but there will be some updation because when you make the estimate, you make it as of particular day. And any this long infrastructure project, when we have made the -- all the -- place all the orders and we do an update of the cost for the -- as bill type thing. So there, we will accommodate the thing and there -- normally, there are contingencies which are provided originally. And we do make an update of the cost estimate at some point of time and we have placed all the orders. So we'll do that for Rajasthan. But what the understanding we have that even if there is an escalation, it meets the IRR requirement because the products and the cracks and income tax rates, the borrowing rates that also had a positive changes to that.
So as of now, is there revenue number or any percentage numbers you can share, sir? Would be high by 5%, 10%...
No. Right now, no, because we need to -- we will be going for an approval first then only I can tell the numbers, not before that. So as and when we do it, we will definitely inform the -- you people.
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
The first question was about the HMEL Bathinda this plant was operated above the plan rate. So what were the factors which helped it run above the plan rate. And secondly, there was total contribution of around INR 300 crores on the JV. Could you be able to help us understand...
Request you to please use the handset mode. The audio is not coming clear, sir.
The first question is about the HMEL Bathinda refinery. What were the factors which helped it run above the plan rate? And what was its contribution to total INR 300 crores of profit from JV? I'll come back with the second question later.
So as far as Bathinda is concerned, you might be knowing that we had upgraded that capacity also from 9 million tonnes to 11.3 million tonnes sometime back. So that has reached its full capacity now and is operating at its full capacity. So that's number one. So -- and because we are the offtaker for the products from them, so even though there was a demand contraction because we have taken a shutdown in Mumbai refinery, we could operate that refinery fully and use their product for meeting our marketing requirements. So that's the answer to your first question. Second part is because the GRMs were better, so they also did better, and they were in profits, and that is a part of this INR 300 crores profit of the JVs, which is appearing there.
Would it be possible to disclose the number in terms of Q1...
So that INR 300 crores, around INR 125 crores is HMEL contribution itself to us.
The second question was about the marketing margin. Over the last -- since 15th of July, there has -- daily price changes have not been happening on the petrol and diesel prices, is there any particular reason to sort of move out of the daily price change at this point of time? And what could be the impact on the marketing margin?
So the marketing price is like that if we increase also, the people are worried, if we do not increase also, people are worried, if we reduce also, people are worried. So it is more a discussion. Basically, what is happening in last few days, the prices are moving up and down, but overall, an average is just hovering amount the same range. So -- and when we do on a 15-day average basis, these are being maintained constant for the time being because you might have seen the crude all up and then you know it went down. Then again, it came back it were to $76, it came to $68. And as far as the cracks are concerned, they will also be moving in a range. So the prices are right now -- the crude prices in the range that they are holding, the product prices also are maintained in the range rather than giving an everyday spike and down. The volatility was more on a day to day basis. You might have seen that in a single day, you go up a $3 and come down by another $3 something. It's not a consistent thing, and there is many times news driven. Like today -- yesterday itself, there was a fall off, I think to $2, $2.5.
The next question is from the line of Aditya Suresh from Macquarie.
One is in terms of Barmer project, can you give us an update in terms of your capacity plans. There's been a bit of uncertainty on kind of what exactly is going to come on stream in the next, say, 1, 2 years and then a bit longer term. So can you just clarify specific plans that you have in next few years?
Okay. So as far as Barmer is concerned, it is a 9 million metric tonnes refinery, and it will have around 2 million metric tonnes of petrochemicals. That is not the original design. But as per the final design, we will sell slightly more petrochemical than what we originally thought. That's number one. So the units now are under construction. At site, we are expecting to complete it by the end of financial year '23, '24, that accounting for the -- whatever the two waves of corona we have seen, assuming that there is no third severe wave of that. So that is the timeline from that. And we will -- because a single train -- so it will not be unit-wise. The start up they happen unit-wise. But ultimately, the whole unit will get commissioned together.
And just on the CapEx in itself, has that been substantially increased in the past, say, 1 or 2 quarters? Can you clarify again what the CapEx is for this kind of...
What is -- expenditure you're talking about?
Correct. The total overall project expenditure, can you just like clarify?
As of today, we have spent around INR 8,000 crores on that.
Correct. And what's the planned expenditure, sir? And has that plan have been revised upward in the past, say, 1 or 2 quarters? Or is there a...
No. Whatever is there in the beginning of the year, we are going ahead with that plan, right?
Understand. And is there something in the works to suggest that you might be looking to expand these CapEx plans and therefore, capacity at Barmer, whether it be at petchem or refinery?
Further capacities? No. Right now, the further expansion we have not planned, except the -- while designing, we did certain optimization of the unit after getting all the license, packages and doing the detailed designing. And with that, we are able to extract certain higher quantity of the petrochemicals, we should give additional margin. That is what it is. But not that additional -- like another trend we are starting there also that has not been planned, as of today. First, we will complete this and then only we'll take any further downstream expansion there.
Fantastic. Second question was on Bathinda. So just in terms of where kind of current product prices are, et cetera. So any rough sense in terms of this capacity expansion of Bathinda, what sort of EBITDA we can see in the current environment?
So Bathinda, as far as refinery expansion is concern that is completed in commission earlier, now they are making a petrochemical complex. And that is supposed to be getting commissioned in this financial year. So it is a 1.7 million metric ton additional petrochemicals will be produced there. So there is a naphtha cracker. There is a Swing Unit, which will generate HDPE, LLDPE. Earlier, they were producing only PP. So it is 1.7 million metric tonne plant. And that is in a very advanced stage. It is almost 97%, 98% complete, and the utilities, et cetera, have already been commissioned there. And we are planning to commission this project in this financial year.
The next question is from the line of Avdhut Sabnis from InCred Capital.
Sir, I mean on the existing refinery projects, could I reconfirm the figure that I have for your Mumbai refinery expansion is INR 4,300 crores. And Visakh is INR 23,000 crores, are those -- are these numbers current?
These numbers we revised earlier. The Mumbai refinery was INR 5,500 crores and Visakh refinery was INR 26,000 crores. It was on earlier itself. So subsequent to that, there is no reason for that. And that is already means those all units are ordered and Mumbai refinery is almost getting completed -- 98% of the expenditure is already done on that.
Secondly, sir, when you say post expansion with Visakh refinery can have double-digit GRM. Can you give us some context I mean with the double-digit GRM is possible, let's say, if the -- whatever was the pricing environment in the first quarter this year? Would that be double-digit GRM and If not...
Okay, let me put it this way that the -- they should add around $6 plus additional GRMs to the whole complex. Let me put it this way.
What I'm trying to understand, Surana, is that when you're giving any number, whether it's 6 or whatever number, what is the -- can you give us -- are you looking at the margins prevalent in FY'18, let's say, FY'19, FY '20? I mean, let's say, let's take the first quarter. In the first quarter, whatever was the refinery environment? Would that $6 still hold?
Yes. It will hold.
The next question is from the line of [ Sumit Vohra ] from [ Mark Capital ].
Firstly, I would like to congratulate you. It's been a very, very tough economic environment in the country. It does not mean that our booming stock market is actually resilient to an economy. So very clearly appreciate on a commendable INR 2,000 crore profit which you've made. So well done on that. Sir, I have a few questions. One, sir, what is the outstanding receivable from the government because IOC mentioned that it was nil. So if it is nil, then can we technically assume that LPG has basically been recontrolled and prices are market linked for LPG? Sir, my second question is on the fact that the government has very recently opened up FDI to 100% in the petroleum sector to facilitate the BPCL sale. So I assume that it is 100% FDI to the entire sector. So is my understanding correct on that, sir? Which basically means that many things could happen in the petroleum sector. Sir, thirdly, my question was, are we looking to kind of increase our nonfuel sales, like by opening consumer stores or something of that sort because that's the trend globally where oil companies are venturing into consumer and departmental stores. And sir, if time permitting, I can just ask only one more question is -- okay, I'll -- you finish this and then I'll ask the last one.
So outstanding from the government is INR 300 crores as of today. That's the first question. Second thing is, this FDI of the government earlier the policy was that if you are setting up a new unit, the person even can have 100% FDI in that. But if somebody is investing in an existing PSC refinery, then it was restricted to 49%. So then the nature of the PSC doesn't get changed, and that was the automatic group. By approval, you can always take it even for 100% at that time. But up to 49%, it was in an automatic rule without needing any permission. Now what government has done is they have allowed 100% FDI -- I have to check, to be very honest with you, I have not checked that in detail, whether it has been specifically for BPCL or under the provision that the government can allow more than 49% on case, because let's see, whether it has been done like that or it has been done as a general rule. I have to check and then probably revert back to you. But otherwise, just for your understanding, up to 49%, it was an automatic FDI rule in an existing PSC company. And for a new company, it was 100% even earlier also. And in an existing PSC more than 49%, you can do with the permission. For example, just to tell you an example, when HMEL was set up, the rule was 26% but HMEL, Mittal said 49%, that time, we had taken an approval and they had an FDI of 49% in this company. HMEL, what we had set up at that time, that 26% only was made up 49% subsequently. So I have to check whether the 49% is remain 100% for everybody or it has been a specific position. That's the second part. As far as third parties concerned, nonfuel income, yes, we are looking at very seriously. In fact, HPCL does have various models of nonfuel income, which we are already operating, if you had traveled on Bombay-Poona highway is one of the biggest outlet which we have and thus the highest sale of highest diesel sales in the country. So there, you'll find all sort of food joints, et cetera, everything is there. But if you go across the country, you will find even the cross words on the HPCL Petro pump, you'll find McDonald's, you'll find the Pizza Hut, you'll find the convenience stores. You will find the hotels, dabhas, even on the highways, you will find the barber shop. The ATMs, anyway, we were the first to do it and it is there everywhere. We are also looking for further nonfuel income to utilize the -- our reach in the market. And that is one of the areas, which is definitely and can be leveraged to create further value.
Okay. Wonderful. And sir, I mean just one last thing, if I may ask. I mean if you can just share your thoughts on the fact of that how do you basically see demand for petroleum? And when do you actually think that new mobility or any new form of energy can actually be a hurdle for the petroleum sector. So what's your thought -- I mean, do you see -- if you can just help me understand on that, sir?
So while a lot of things are being talked about on various new forms of energy. But whatever I read and what I gather from various expert agencies and as per our own assessment, there is a difference of penetration of various forms of energy in various countries differently. So what is true for European country is not true for India. From various angles based on various things. As far as India is concerned, I think most of the expert agencies are also of the view that at least till 2035 or 2040, the new forms of whatever, the mobility, or the energy resources, which come, they can take a part of the incremental demand but cannot destroy the existing demand. So the peak oil demand is not before 2035 even in a conservative case. That's number one. And one of the estimates, IHS estimate, you see some time back, they have given -- it was beyond 2040, even some , IEA et cetera, also is 2035 and beyond. So that's the first part. So coming back to the Indian context. Oil will continue to be an important part of the energy basket at least till another few decades I must put it, at least till 2040. And in the meantime, there will be additional forms of energy, whether EV, whether biofuels, whether hydrogen, whether hydro CNG, or even some other on the mobility side or in the power side renewables being solar, et cetera. That will occupy a part of this space of the additional because the cost is a factor, convenience is a factor, infrastructure is a factor. All 3 will need a substantial policy push and maybe subsidy or something like that to make it popularize and adoptable. So the cost efficiency wise, IC engines will continue to dominate the space for some time. And so we will -- our strategy will be to strengthen our existing business and expand in the newer areas of business. So that we have got a good and healthy mix of both and including the nonfuel income which you mentioned. And of course, the other forms, which is coming now is becoming integral, that is petrochemicals. So all refining companies are integrating with the petrochemical. So that brings another form of resource revenue and the growth drivers for the future. It also derisks your existing businesses, and it improves the margin apart from gas.
[Operator Instructions] The next question is from the line of Manikantha Garre from Axis Capital.
Just wanted to check on one question. If you can highlight to us which all companies that we have partnered so far for the EV charging infrastructure. And with respect to the recent tie up with Tata Motors and CESL, how does the model work? Like, whether there is any difference in terms of the CapEx, OpEx that you'll be doing here with both the partners or it's constant are the same across the partnerships that you are doing? That is my question, sir.
We have got around 5 partners as of today and a startup, which we are working with. And there are -- most of these are the OpEx models, whether the CapEx is spent by the partner and the revenue has got a share. That's the type of model in most of these cases. And the way these different people operators are also different, like one of the start-up has come out with a charging thing which can work like a pole -- street pole itself, lighting pole. So it can directly connect to the normal power system and do a very mobile type of thing. Some people have a better charging setting system. Somebody has got an app where we can meter and charge it their itself. So there are various models are available. But on a broad sense, it is more an OpEx model from HPCL side, where we share the revenue for the space and the outlets, which we use for ours and the equipment is provided by them. So we've got around 5 or 6 companies which we have the partnership.
The next question is from the line of Sabri Hazarika from Emkay Global.
Sir, just one book keeping question. You mentioned that your Visakh expense and CapEx has been increased to INR 26,000 crores, is that's right?
It was at some time back. I don't know whether at that time -- we had mentioned it, it is almost more than 2 years, to which when we approved that.
Right. And does -- and what about the bottoms upgradations? So this is part of this?
It is a part of it. Yes, there is a part of it. It includes everything. As far as Visakh is concerned, that includes everything.
Okay. And how much of that has been spent so far?
Okay. I'll get you the figure. I don't have -- immediately -- off hand with me of the project per se, but I'll get you.
The next question is from the line of Rohit Mehra from IIFL.
What are your CapEx plans for the next 3 years, and it would be good if you could provide a break up how much is the refinery marketing level.
So as far as -- so our marketing CapEx is normally around INR 5,000 crores a year. And the refinery is also almost the same. So total INR 14,000 crores CapEx, which we do, around INR 5,000 crores will be marketing, INR 5,000 crores will be refinery plus R&D et cetera, which we do. And the remaining will be JVs and the other part, like IT, et cetera. That's the broad breakup, which we have. This year, CapEx plan is around INR 14,500 crores. And next year will also be almost similar. After that, it will taper off.
Mr. Mehra, does that answer your question?
Visakh refinery, already spent INR 15,000 crores after that. And basically, there in the bottom upgradation in itself cost INR 9,000 crores. So the rest of the unit, most of the things we already done.
The next question is from the line of S. Ramesh from Nirmal Bang.
If you look at your gas business, is it possible to share when the volumes and contribution to revenue volumes will be distributed in the kind of numbers we're looking at in terms of top line and bottom line for your city gas businesses, which you own directly in CPL and maybe JV, you may have?
So we have got the city gas distribution business in 20 geographical areas with us directly and within the JVs. And we are having an LNG terminal, which you might be knowing that now it is owned by us100%. So that is a 5 million metric tonne capacity. So our desire is to have 5 million metric ton of volume, which will be around 10% of the total volume of sales, which we have on the gas business in the near future and which will get increased further as the -- as more and more stations are brought in the system. Does it answer?
Sir, is it possible to share -- will you see visibility on the volumes and on the P&L impact, just to get a sense in terms of the time line you're looking at?
We are already marketing CNG even in our own GA or even in the last year, it was around, I think, 4,800 tonnes? In the last year also, even we had done more than 4,800 metric tonne of CNG. On the GA we ourselves are holding, not to include the GA above JVs and not to include from the petrol pumps where the GA belong to somebody else, but being sold to our petrol pump. I'm talking purely the GA where we are -- having the authorization, we had done more than 4,800 tonnes of as in this quarter, I think, in this quarter.
Just to take this discussion further. Is it possible to tell us whether it's already -- EBITDA breakeven or PBT breakeven -- What is the impact on the profitability or it will take some more time?
So as far as the JVs are concerned, they are already in profit. So I can say that it is already broken, as far as Bhagyanagaris concerned, as far as our Avantika concerned, they both have made profit in the last year and in the quarter also. Now the HP oil, this is the third JV. It is just starting. It just started, and that will take some time to come. This is the first year of operation of that, after when they started commissioning to CNG. So as far as CNG station are concerned, they come into profit almost immediately. So -- but as the volume builds up, then we start showing in the bottom line basis. As far as HPCL is concerned, because we are not making the balance sheet separately for this gas line right now. And these GAs, so I won't be able to tell you separately, but we can work it out and let you know about that. But the JVs, which were established earlier, they're already in profit.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Amit Rustagi for closing comments.
Thanks a lot, sir, for answering all the questions very patiently and the call was quite informative. I now sincerely thanks everyone, for joining this call. And pray, again, that everyone remain safe. Thank you. Thanks for ending on this call.
Thank you, everybody, for your time, and thanks, Amit, for hosting and wish everybody a very safe and healthy future. And we hope that the third wave doesn't come. And if it comes, it is not severe. And the economy also open up all of you must be desperately looking for it to happen. And we also hope the same and the signs suggest that probably that is happening. So thank you very much, all the best to you.
Ladies and gentlemen, on behalf of UBS Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.