Indian Oil Corporation Ltd
NSE:IOC
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Indian Oil Corporation Ltd
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Ladies and gentlemen, welcome to Q1 FY '19 post results conference call of Indian Oil Corporation Ltd., hosted by Batlivala & Karani Securities India Pvt. Ltd. [Operator Instructions] Please note that this call is recorded. [Operator Instructions]I would now like to hand over the conference to Mr. Bhavin Gandhi. Thank you. And over to you, sir.
Thanks. Good afternoon, everyone. On behalf of Batlivala & Karani, it gives me great pleasure to once again host the post result 1Q FY '19 call of Indian Oil Corporation. Without much ado, I would like to hand over the proceedings to the management for their initial comments, and then we'll open the floor to a Q&A session. Over to you, sir.
Thank you, Mr. Bhavin, and good afternoon, friends. We in Indian Oil are here to address you on the quarter 1 results of FY '19. Director of Finance will make the initial comments. We have with us Mr. Sandeep Kumar Gupta, the Executive Director of Corporate Finance; Mr. Rohit Kumar Agarwal, the General Manager, Corporate Finance; Mr. Avinash Singhal, Senior Manager of Corporate Finance and Treasury; Mr. Sadashiv Naganure, the Deputy General Manager, Corporate Finance and Treasury, along with me, Matthew, the CGM, Corporate Finance and Treasury.So I will just hand over to Director of Finance to address you. Thank you.
Thank you, Matthew, for that introduction. Dear investors and analysts, a very good afternoon to all of you once again. I take this opportunity to welcome all of you to this conference call organized today post announcement of first quarter's results. Though -- by this time, you would have certainly gone through the accounts posted on the website and also through the updates received by most of you, I would like to briefly dwell over -- and dwell on these results to provide additional clarity insight.Before that, I would like to mention here that, this time you would have noticed that our quarterly accounts are slightly delayed. And in fact, we were generally doing it by the end of July, but this time, August. The main reason is that we thought we will voluntarily opt for this consolidated quarterly results, which will become compulsory from next year on quarterly basis, but we decided we will start on a voluntary basis from Q1 this year, so that was an attempt, so that's why we delayed, and hope that in the subsequent quarters, we will be squeezing the time line. Apart from that, you would have noticed 2 or 3 [ changes ] too. One more thing, that in our annual report for the last year, we have also introduced the integrated financial reporting from '17, '18. So these are some of the progressive steps that we have taken. We -- from this quarter, we have also adopted hedge accounting from this quarter onwards.On the company side, the company has moved up a few notches above in the Fortune 500 list from 168 rank to 137 rank, and continues to remain the top retail Indian company in Fortune Global 500 list. Coming to the financials. During this quarter, the company had [ logged ] a profit after tax of INR 6,831 crores as against INR 4,549 crores during corresponding quarter last year. It's a jump of almost 50%. On a sequential basis, it shows a jump of 31% from INR 5,289 crores last quarter. The income from operation during the quarter result an increase of 17%, primarily driven by the price increase and quantitative changes are also there, and which translates to numbers to INR 1,49,747 crores as against INR 1,28,183 crores. On sequential basis, compared to last -- just previous quarter, the income from operation has increased by about 10%.Now talking about the each verticals in brief. On the refinery side, as I -- we informed in last conference call that now we are taking all refineries put together, including the Paradip Refinery, so no separate mention about the Paradip. During the quarter, our refineries achieved a capacity utilization of 102.4% compared to 101.6% during the corresponding quarter last year. This is despite the fact that the Paradip Refinery was under the planned shutdown for almost 22 days in the month of April. However, in this quarter, from May onwards, the refinery is operating at almost 100% capacity. May, the capacity utilization was 101%, June was 87%, and July is 106%. So that was a shutdown which was taken for some reasons in April, basically there was an issue on the hydrogen side.
It was planned.
And the planned shutdown was taken. It was planned beforehand. Coming to the refinery efficiency parameters, the distillate yield in the refinery has touched 80.3% during the quarter as against 78.6% in the corresponding quarter previous year. The fuel and loss was 8.6% as against 9% last year. Riding on the inventory gains, the refineries have registered a GRM of 10.21 barrel -- $10.21 per barrel during the current quarter as against $4.32 compared to last year. So $10.21 is including the inventory gains which compared with $4.32 last year. And as for the practice followed during earlier quarters, we have continued to work on the GRMs whereby the inventory effects are stripped off and price lag are also factored to arrive at this normalized GRM. Accordingly, normalized GRM for the quarter is $5.18 barrel as against $6.44 barrel for the last year same quarter.On sequential basis, Q2 -- Q1 versus Q4, you will see that the cracks have showed a downward trend. During the quarter, MS cracks have come down by almost $1.2. These were basically $10.2 earlier, and these are now $8.98, and as a secret, they've almost been at par with the previous figures.Pipelines continued to generate this stable returns, given EBITDA of INR 1,627 crores during the quarter compared to INR 1,590 crores in corresponding quarter last year, which is driven by the profit increase by 7%. Marketing side, the total sales during the quarter have been at steady levels with minor increases compared to the corresponding quarter as far as the quantitative price is concerned. There were delays from the domestic perspective. The sales have recorded 4.3% rate as compared to the first quarter or even on a sequential basis. Therefore, during the quarter, marketing has registered a healthy EBITDA of almost INR 4,400 crores, primarily driven by the domestic sales and retail exports.Petrochemical side, the -- at the cost of repetition, I would like to reiterate that our petrochemical vertical has grown to contribute extensively to company's bottom line. Accordingly, during the quarter, pet chem business has put an EBITDA of INR 1,630 crores. There is a reduction in EBITDA compared to the corresponding quarter previous year, which is primarily on account of reduction and shrinkage of the grades on LLDPE.As regards to borrowing is concerned, you would have seen that the borrowing as on 30 June has decreased to INR 44,797 crores as compared to INR 58,030 crores as on 31 March, 2018.So this is briefly about the financials and about the company. So I now leave the floor open for the investors for their queries. Thank you for being patient with me.
[Operator Instructions] We have our first question from the line of Pinakin Parekh from JPMorgan.
Sir, my question is, first of all, on Paradip. Now FY '18, sir, we saw the ramp-up of the refinery. We saw the refinery hit a certain utilization rate. Now going forward, sir, in this year, what do you think Paradip should -- in terms of the contribution to the refining segment, now the volume tailwind is behind us, but in terms of GRM, sir, how can it move higher from your [indiscernible] based on its own efficiency, sir?
See, for in that case, the whole thing depends on how Paradip Refinery runs. As I explained that from May onwards, it is running at more than 100% capacity. So that itself is a testimony of the performance. And hopefully, the cracks remain favorable, I think the refinery will be generating very good GRM. As of now, it is difficult to predict the GRM, not only for Paradip, but for any refinery because this whole thing will depend on the cracks and the absolute price of the crude because the -- ultimately, if there is a continuous increase in the crude price, the fuel cost will increase. So I cannot predict the GRM, but I certainly can say, if there are no hiccups and there are no reason why Paradip will not give a very good GRM, capacity utilization is good. Heavy crude intake is increasingly -- increasing in the refinery. So all these factors will contribute to the higher GRM.
Understand. On a granular basis, if the blend -- you said -- you mentioned in the call earlier in your comments, sir, that $5.81 was broadly the adjusted GRM for the company as a whole. Paradip would be -- where would Paradip be, sir, on similar metrics?
See, in the first quarter, the Paradip GRM will not be comparable because Paradip out of 90 days, 22 days it was under shutdown. The -- April month, the capacity utilization was only 23%. So right now, Paradip number will not be comparable with the quarterly numbers.
Understood. And sir, my last question is on the pet chem volume, sir. FY '18 volumes had come off. I mean, should we see the volumes recover back to the averages we saw in F '17, 2.55 million, 2.6 million tonnes. How should we look at the pet chem volume, sir?
Pet chem volume, I don't see any problem. I think the -- as far as the volume is concerned, volume will be maintained. The issue remains is what will be the cracks, so that will determine the profitability, but volume will not be an issue.
We have our next question from the line of Vidyadhar Ginde from ICICI Securities.
So first question was on the -- how much oil do you import from Iran? And do you have a term contract with it? And how do you see that panning out going forward, given the sanctions, which are likely to come into effect from November 4?
See, the -- see, our contract with Iran is for 9 million metric tonnes per annum.
Okay. How much is imported until now?
[Foreign Language] Import is continuing on pro rata basis. Basically, on pro rata basis, the import is going on. And what was the other question of you?
So basically how do you see this panning out because U.S. has been talking of the imports going down to 0 by November 4. There is also hope that they may give some -- exemptions may be given by then. So how do you see that panning out? Because if -- will the government play the key role? How do you see this panning out?
Yes, I think this is more of a matter of diplomacy and the relations between the India, U.S. and Iran. So I think the government will take the call on this, and we'll follow whatever they suggest. As far as we have concerns, we -- mixing up the quantities will not an issue with us.
Correct, correct. But you will...
Nothing is decided here.
So even now this month the imports are continuing on a pro rata basis.
Yes.
Nothing has happened. My second question was regarding the polypropylene capacity, sir. What's the time line now?
The polypropylene?
At the...
The expected date is December 18.
Okay. So it's progressing to get some...
Yes, it was completed on 30 June. So 87% was in progress on 30 June.
Okay. And so that is when you will see the propylene production in the Paradip Refinery go up?
Yes, yes.
Sir, what's the -- are you producing any propylene right now? Or how does it...
No. Right now, no. We are not.
We have our next question from the line of Mr. Aditya Suresh from Macquarie.
I just wanted to clarify 2 items, if I may. Firstly, just on refining. So again, so assuming the same product crack environment in 1Q holds for Q2. Let's assume, no inventory gains, no RTP pricing impacts, is it fair to assume that you'll earn $5.20 in 2Q? Can you just confirm that?
[indiscernible] It may not be $5.18 what we have said because this includes an element of the pricing -- price lag, again. So it will be slightly less than $5, less than $5.
Right. Okay. And then if...
Maybe somewhere around $4, $4.5 here.
Okay. And as a follow-up to that. This pricing impact, which shows as a negative item for refining, is it safe to assume an equivalent positive item shows up in marketing and that's why 1Q marketing was better than expected. Is that a fair comment?
Yes, so Sandeep Gupta, maybe he'll reply.
Yes. I'm Sandeep Gupta. If -- I think, if there is a corresponding impact -- the corresponding to this price lag impact in the refineries, there is a corresponding opposite impact in the marketing, so the same we have not exactly quantified. But yes -- principally, yes, there is an impact.
Okay. And then the final question I had was on your fuel and loss. Can we expect any improvement in this position over the next 1 to 2 years?
See, in terms of the percentage fuel and loss, it has been our endeavor to constantly improve all this, and you will see that there is a continuous improvement happening on this side. But as far as the value is concerned, the whole thing will depend on how does the crude price move. If crude prices move up, probably, the value of [indiscernible] will go up. But as I just [indiscernible] the proper endeavor is to bring it down by another 0.1 or 0.2 percentage points.
We have our next question from the line of Probal Sen from IDFC Securities.
First question was a follow-up on what the previous questioner asked. When you say that normalized margins would actually decline a bit because pricing gains will not be there. I just want to understand if Paradip actually operates at full capacity utilization, would that not offset that impact, sir?
Yes, yes, you are very correct. Yes, I missed that because we never actually forecast the GRMs, but because that was a question, so I gave -- you're very correct. Paradip because it is now running at 100%, that will make an impact.
And a lot of other group [indiscernible].
And we are also hopeful that the Haldia [ copelat ], which is in the process of commissioning...
By November.
Will also -- by November, so will also play well in the improvement of the GRM and more heavy-crude processing at Paradip. So probably it may be -- it may come close to 5, but it's difficult to predict.
Got that, sir. Got that. I just want to clarify that point.
Yes.
That's one. Second, with respect to the -- sir, can we get a number on the exact percentage of FO that is produced overall for the company today?
FO percentage, we'll give you, we'll give you.
Sure.
In the meantime, there are any other question?
Yes. Lastly, I just had one more in terms of, if you can just give a slightly more segment-wise CapEx guidance for FY '19 and '20, if you have, sir?
That I can give you. The CapEx guidance was [indiscernible]. So the -- for '18, '19, the refinery is INR 1,500 crores, [indiscernible] INR 2,300 crores, marketing INR 5,800 crores.
Sorry, marketing was how much, sir?
INR 5,800 crore. And petrochemical is another INR 2,100 crores. And then there are other E&P and other, so that makes up to almost INR 22,800 crores. E&P is another INR 400 crores, gas accounting another INR 600 crores, broadly.
Sir, does this include any CapEx on the West Coast refinery at all?
No. No.
This excludes anything expect -- anything that might come up, right?
Yes. Yes. FO?
[indiscernible]
[Foreign Language]
The FO is about 4% from the total crude.
Okay. I am asking this in the context of this whole news about the IMO regulation, sir. And whether we are in a position to sort of either upgrade this to low sulfur FO? Or how do we plan to tackle it if the implement -- if the recommendations are actually implemented come FY '20?
We have the twin-action plan. One is the reduction of the FO as you have seen that in Haldia. The FO production will come down. We have some plans at Mathura also to bring down the FO. And at the same time, we also want to take advantage of the opportunity, which is coming in the update IMO guidelines. So we will -- there is plans to produce some bunker grade taking the [ all our ] opportunity available. So that -- those plans are also in our [ drawing ] board.
We have our next question from the line of Sabri Hazarika from Emkay Global.
So do you have some sense on the marketing margin of various products over the last 2 quarters sequentially? I mean, March quarter versus June quarter, so how has it behaved in petrol, diesel and other products?
As far as, I think, I explained in earlier conferences also that there are no -- there is no movement in the marketing margins as such. So marketing margins are generally not anchored with the prevailing plan and the movement in the prices is governed by various factors, the international prices, our position, delivery charges, that is primarily by that. There will be marginal changes in the marketing margins.
Okay. So during -- what we have seen in the last -- under certain periods that the implied margin based on your own price buildup has become depressed because of elections or whatever which was going on. So was there -- I mean, is it like -- can you confirm that or it is more or less not that intense?
I think, sequentially, you can compare the marketing margins with the earlier quarters. So...
We have our next question from the line of Manikantha Garre from Axis Capital.
May I ask -- I request to give -- I request you to give some more color on the CGD sector wherein we have won [ 15 ] geographical areas for recent bidding round?
Yes, basically, I would like to just give you the numbers. See, in the total geographical areas, IOC actually participated in 3 capacities. One is the IOC stand-alone, other is IOC that are running and the third was IOC, yes, that green gap [indiscernible]. So I will give you the numbers. So IOC stand-alone, we participated in 34 geos, geographical areas, out of which the [indiscernible] has now been opened for 30, and we have won 7.
[indiscernible] give us some guidance on the volumes and the CapEx [indiscernible] 7 to 8 [indiscernible]. What are the volumes we are expecting here, sir?
I've just completed number in where is it 20 here in -- we have participated in [indiscernible] Adani. Out of 20 [indiscernible] have all been opened for 20, and we have won 9 here in place of [indiscernible] where we have [indiscernible] to give. We participated in 3 and all 3 [indiscernible] have been opened, and we have won in 2 cases. So out of so far 53 cases, we have won [ 38 ] cases. So as far as the CapEx numbers are concerned, I think, we will be sharing those numbers because only there are -- so under that, it all depends on LOI, when the LOIs are issued and when we start commissioning the work. So it will be too early to give you the CapEx number right now. So maybe by next quarter some directional numbers will be available. In any case, [ this year ] the CapEx numbers will be very low because things will take time in mobilizing, ordering and other things.
Got it, sir. If I can ask one more question about the Others segment that has been shown as a loss in EBITDA contribution of around INR 283 crores. Can you please give us -- can you talk about this?
It's actually foreign exchange loss on our loan portfolio. It is not allocated to any divisional EBITDA and instead is accounted for under the head office, so you'll see that the foreign exchange loan or the foreign exchange loss on other than [indiscernible] is about INR 870 crores, so that is primarily going into others.
So does that imply there is around INR 1,000 crores of profitability on some other segments?
Yes. You can calculate it.
[indiscernible]?
Yes, that could be correct.
Okay. What would -- what comprises [indiscernible] sir?
This just means loans of INR 871 crore is on account of exchange fluctuation on the loans. That will be figured.
Sir, if we take into that -- taking into account, others won't show INR 600 crores of...
[indiscernible] I think, you're getting into the [indiscernible] won't be able to give you the figures separately. Is that okay with you?
We have the next question from the line of Ms. (sic) [ Mr. ] Aishwarya Agarwal from Reliance Mutual Fund.
[indiscernible] Sir, can you please help me with the status of this lift of the refinery project in terms of where we are and what are the milestones and how things will move?
[indiscernible] where the objects are almost available to you, now the land acquisition part we work is continuing. So no significant change.
[indiscernible] and then the orders will be placed?
[indiscernible] Yes, will take time. [indiscernible] DSR itself will take time. It is being prepared, so it will take time.
And that acquisition will [indiscernible]?
[indiscernible] Things are in progress at different stages. So we'll have to wait.
And sir, one more question on this [indiscernible]. I mean, where we are in October [indiscernible] and the volume share 1.5 million tonnes is what we're talking. So are we -- what is the status?
LNGs are 95% is complete as of June. So that was the position as on June. And scheduled completion is expected to be October '18. So it's not too far now.
And the volume, sir?
Volumes are [indiscernible].
1.5.
Initially 1.5 million metric tons. [indiscernible] total capacity is 5 million, but it will start with the 1.5 million. That is the initial volume that we are targeting in first Q.
And the pipelines, which will be 20, 25 kilometers [indiscernible]
We'll start -- that work is now going on, and it is aligned with the completion of the terminal. So some approval in [indiscernible] that 600, 700 meters, the spending, that is with this already, nothing to do with [ us ]. So that will come.
We have our next question from the line of [ Chindrai Gandri ] from Future Generali.
Sir, if you can just [indiscernible] like the GRM numbers, which you mentioned. So our total GRM is around $10.20. And in the fresh note which you guys have released, it said that the inventory gain is around $6.80. So which means the core GRM would be around $3.40. Then you mentioned that, adjusting for the [ NRR, ] I mean, the timing difference you have a 5.2 number, and then you also gave another number of 4.5. So -- I mean, if you can just reconcile how you can see 4.5?
Yes. Actually there are numbers which we initially told $10.21. [ But we have actually ] normalized GRM is $5.18 per barrel, which is the combination of 2 adjustments. There is one in inventory gains and the second is the price lag. So $5.18 is the net normalized GRM. The number which -- [ we spoke of ] 4.5 was against the question that if everything remains unchanged, what would be the GRM going -- GRM sale quarter 2. So in response to that, he said that it may be $4 to $4.50 per barrel. But as -- in the subsequent questions, you would have noted that he also mentioned about the GRM increase, which will be there as a result of commissioning and other locations like [ Haviere ] corporate commissioning, et cetera. So -- and as the prices are -- the situation of prices and the cracks is not certain, it will not be fair to give any guidance on the GRM numbers.
So price lag from them could be roughly, say, $0.70?
No. it's $1.75.
$1.75.
As you mentioned, $3.40 per barrel after netting off inventory gains. And then you add $1.75 towards the price lag. So that makes this normalized GRM $5.18 per barrel, which we should compare with Singapore benchmark margin.
We have the next question from the line of Sanjay Mookim from Bank of America.
Sir, I had a question on the marketing EBITDA as you report every quarter. There is significant variance even if you adjust for the inventory gains and losses as you report them. And especially in light of your comment that marketing margins are stable and they do not move too much quarter to quarter, why is the marketing EBITDA so volatile?
I think the marketing items whether you have not shared the numbers correctly, the -- there's hardly -- it's not too many movement in the overall marketing EBITDA.
INR 2,000 crores.
It has been above?
Yes. Margins [indiscernible] [ not exact ]. Just give me a second. On margin side, [indiscernible] marketing [indiscernible] I think some inventory gains are getting this.
Sir, even if you take out the inventory gains as you reported...
Inventory gains in marketing is how much?
[indiscernible]
It's not inventory gain?
No. [indiscernible] for the inventory gains. It is flat, actually.
Inventory gains are flat [indiscernible]. Inventory gain is 1-9-4-8, INR 1,948 crores. If we exclude that and you exclude the inventory impact, then the marketing EBITDA is comparable at INR 2,400 crores to now compared to INR 2,168 crores in Q1 last year and, sequentially, [ INR 2,429 crores ]. So INR 2,168 crores last year, INR 2,429 crores in Q4 and INR 2,400 crores in Q1. So I think fairly stable and flat [indiscernible].
It should be [indiscernible]. Should we not also be adjusting for some ForEx losses in marketing? Or is that completely out of the [indiscernible] because, this quarter, you have ForEx losses...
[indiscernible]
Yes. There is no ForEx loss element at all in the marketing EBITDA that you're reporting?
No.
Okay. And then if I may follow up, sir, this quarter, there were clearly periods where the margins on petrol and diesel were well below what they should be or well below what they were in the sequential or previous quarter. Yet if the EBITDA is flat both sequentially and YoY, we can't seem to think of a reason why that may have happened, sir.
As you would have noticed from one of the questions from the previous analyst, there is a corresponding impact of price lag in the marketing also because marketing division is realizing the prices on the market at the latest prices and the latest exchange rates, whereas the purchase price is at the lower price. So there is a gain at marketing because of this also, which is offsetting that price modulation what we were talking about.
But if I understand it...
[indiscernible] plus there are certain conversion of export sales to domestic sales because of...
[indiscernible] though there's marginal change in the quarterly sold by marketing division, but as [indiscernible], we exported some now where we do not make money. And the domestic sales have gone up. So that have made the difference in improving the overall position. But one thing which I now can say that is what Mr. Gupta was mentioning because [ out ] of the exchange [ efficiency ] for the overall value increases the -- therefore become additional gain because of that to marketing, which is not [indiscernible] exchange fluctuation, but because of [ part of the ] price. Exchange fluctuation is actually accounted for, but that's because part of -- so that's what I want to [ makes up ] difference.
Right. Sir, in this to -- just to complete that point, the lag that we're talking about is the last fortnight of the quarter, right, the 14 days from the CRTP doesn't adjust for marketing?
Yes, yes.
Which is that 14-day lag that we should try and model if you can?
Yes. In case of LPG, it is one month, and for other [indiscernible].
We have the next question from the line of Mr. [ Sumit Roda ] from [ Smart Sun Capital ].
Sir, my question to you is more on the marketing point of view. Sir, I mean, you know I keep reading a couple of reports. [indiscernible] stating that because of the upcoming elections and the upcoming election in May 2019, marketing margin will be subdued. But sir, I just heard what you said that marketing margins have been very stable of late. So can we assume that marketing margin will continue to be stable and there's no reason, I mean, for the stocks to actually level, sir?
Yes. It's fair to assume so.
Okay. And sir and [indiscernible] for my second question, sir, is on the GRM point of view, I just heard you explain that, but sir, just one observation which I had was that after the weakness in June, GRM actually now have moved up to about 6.5 on the Singapore GRM. So because of all the expansions ramp already [ kicking ] in, can we assume that we should at least be able to be close to the Singapore GRMs? Is that a fair assumption?
For us, close to Singapore GRM, I think that's a bit something which is achievable. But as I said, it is forecasting GRM which will be very difficult because various factors which, on efficiency side, performance side, yes, I think the refineries will perform well. And it should be comparable with Singapore.
We have the next question from the line of Nitin Tiwari from Antique Limited.
So if I heard you right, you were saying that the marketing margins have been stable and because whatever price modulation happened on the pricing end, that was offset by, on the procurement side. So does that mean that the refining segment was subsequently hit to compensate the margin -- the marketing margin?
Yes. We have said [ about ] modulating our procurement price. This is all internal because there is no procurement by marketing division [ because ] our products are starting to get into marketing division for now.
[indiscernible]
Okay, sir. And secondly, if you can help me a little bit understand the [indiscernible] a little bit. So what is the day of inventory that we are typically using as a benchmark for our calculation in the refinery and as well as on the marketing side? When is that. And second is, there are portion of inventory gains, which given some more time will actually translate into the core GRM in terms of [indiscernible] intermediate stock or something like that, which given some more processing time to realize in the final product and [indiscernible] core GRM?
Can you repeat the question in different words, so that we are able to understand? Can you word it differently?
Sure, sir. So what I was asking is that how many days of inventory actually you use for calculating your inventory gains on the refining side and on the marketing side? That is one part. Second part is, given that there is a huge inventory gain number in this quarter, so is there any portion of that gain which is transferable to the core GRM because it's probably intermediate stock or [ unproferated ] stock, which would have [indiscernible] a final product and hence could have reflected in the core GRM and not in the inventory gain? Is there a shift possible from one segment to another segment? That's what I am trying to understand.
Segment results quarter to another, or it could not...
No. Within the entire GRM of $10.20. If we look at -- the inventory gain is about 6.5. About 3.5 is the core GRM, right. So is there a segment in the inventory gain of 6.5, which further pushes it to translate and move towards the core GRM and add to the core GRM?
No. Actually this inventory gain -- basically Indian Oil is holding almost a similar level of inventory at average [indiscernible] rate...
[indiscernible]
So this inventory gain represents the difference in the opening and the closing rate of the inventory corresponding to the inventory holding. So your next question on...
So how many days of inventory [ is deducted ] on the refining side and on the marketing side?
45 days inventory we hold.
[indiscernible]
And [indiscernible] finished [indiscernible] in 7 days [indiscernible].
[indiscernible]
Seven days, is that [indiscernible]?
Yes. And included 45 days.
And sir, last question is on your refinery CapEx and [indiscernible] that you were [ contemplating ], and I believe you said INR 8,500 crores is what you're looking to spend on the refinery, right. So I just wanted to like get an update on all those upgradation projects and which ones are completed, which one is there? So if you can help give us that?
If completed means these are all -- will get completed by next year only because BS [indiscernible] and the data is...
2020.
2020. So those major projects will be [indiscernible] BS-VI [indiscernible] they are all projects put together. This year, it's INR 4,600 crores. That's what we will spend. And one project, which is going on in [ Mex et vezeera ovengo ], that is another almost INR 750 crores there. And then there are projects going on in Gujarat and [indiscernible] INR 800 crores, [indiscernible] [ INR 700 crores ]. These are the broad [indiscernible] INR 8,500 crores in refinery. [indiscernible] which is getting completed in the [indiscernible] most of them will be spilling over to next period as scheduled.
Right. So if you can just let me know, help me understand what is the project that is there in Gujarat and [indiscernible]? You're putting up additional [indiscernible] unit or what is that?
Gujarat and [ Vezeera ] [indiscernible].
[indiscernible] So Gujarat, we're talking about expansion, which is from 13.7 million to 18 million metric tons per annum case. That's one which is having a [indiscernible] and which we will be embarking upon. In that, there will be 1 new atmospheric unit to replace the 4 at once. And then the improvement in the [indiscernible] yield and [indiscernible] also. This is what is expected of the [ Meera ] expansion. But that is on the [indiscernible]
[indiscernible] BS-IV -- the units are being readied for BS-IV. That is the project which is on the actual spending is right now happening.
Okay. And then Barauni?
And just to clarify, if you're talking about INR 8,500 crores to be spent this year, this is from Gujarat. It will be only for the BS-IV stuff and for...
And Barauni also BS-IV.
Barauni also the same. It's only [ quantity obligation ] for this year.
We have our next question from the line of Manikantha Garre from Axis Capital.
I just wanted to confirm with you on how much of silicon was processed in Paradip? I think last year it was mentioned that around 13% was processed and the additional capacity is 40%?
[indiscernible]
We'll get back to you on this number because Paradip was under shutdown for 22 days. So we'll have to work out the equivalent number and tell you.
[indiscernible]
We have our next question from the line of Mr. [ Chindrai Gandri ] from Future Generali.
Sir, you mentioned that total days of inventory, was the marketing division, which is only 7 days. I just wanted to...
No, no, no. I maintain the 45 days crude inventory and intermediate [indiscernible] for these goods. If the inventory at the refinery is at 7 days, then we're finished, 7 days.
So what would be the inventory...
Marketing will be [ with products ] on product side...
Products, yes.
Products will be profiting on [indiscernible] 20 to 25 days.
Production. So it will be basically a division that [indiscernible] LPG and [indiscernible].
Yes. Product inventory is held both in marketing as well as in refining. So it is 25 days.
Only in marketing will be how much?
22.
22.
And sir, you mentioned the crude inventory is 45 days. But I mean, I understand that because Paradip is a coastal refinery, so -- I mean, I believe then the average inventory that we hold in crude would be -- would have gone down by now.
Would have gone down by now if compared to what [indiscernible]
So earlier our crude inventory was around 40-odd days. But post-Paradip, it would have gone a bit -- it would have gone lower. Are you even for Paradip, you're holding crude inventory for 45 days.
I don't think there will be significant change because the -- on the balance capacity. The [indiscernible] is related to the number of days in the best production. So not -- and from time to time, impact will also be [ there because transitional time ] is the same. Not much of change this year.
As there are no further questions in queue, I now hand over the floor to the management team of IOC. Thank you, and over to you, sir.
Thank you.
Ladies and gentlemen, this does conclude your conference call for today. We thank you for your participation and for using IJunxion Conference Service. You may please disconnect your lines now, and have a great evening ahead. Thank you.