Indian Oil Corporation Ltd
NSE:IOC
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Indian Oil Corporation Ltd
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Ladies and gentlemen, good morning, and welcome to 3Q FY '21 Indian Oil Corporation Limited Conference Call organized by Batlivala & Karani Securities India Pvt. Ltd. [Operator Instructions]I would now like to turn the conference over to Mr. Harshraj Aggarwal. Thank you, and over to you, sir.
A very good morning to all. On behalf of Batlivala & Karani Securities, I welcome you all to the postresult conference call with the management of Indian Oil Corporation. It gives us great pleasure to once again host the management for this postresult discussion. I would now like to hand over the call to the management for the initial remarks, post which, we will open the floor for a quick Q&A. Over to you, sir.
Thank you, Mr. Harshraj. We welcome you to post-results conference call. From management side, we have Mr. Sandeep Kumar Gupta, Director of Finance, IndianOil; and Mr. Matthew Thomas, Executive Director, Corporate Finance and Treasury. Along with them, we have Mr. Rohit Kumar Agrawala, General Manager, Corporate Finance; Mr. Prabhat Himatsingka, DGM, Treasury; and myself, Avinash, Chief Manager, Treasury. To begin with, Director Finance will briefly touch upon the quarterly performance highlights, and then he will take the questions. Now I will request the Director Finance of Indian Oil to address the meeting.
Yes. Good morning to all of you. I take this opportunity to welcome all of you to this conference call post announcement of Q3 results. First, I will touch upon certain highlights to provide additional clarity and insights. As you are aware that in the previous 2 quarters, the demand for petroleum products was witnessing month-on-month volatility on the back of intermittent lockdowns. However, during Q3, there was sustained rebound in demand of petroleum products. Accordingly, refineries ran at a full capacity, and the capacity utilization was close to 102% during the third quarter. As far as demand for some of the major products are concerned, the preference for personal mobility has led to higher consumption of gasoline, that is motor spirit or petrol. During October '20, the gasoline demand was at about 103% of last year's volume, and it further improved to about 108% of last year's volume in the month of December. On the gas oil or diesel front, in the month of October '20, sales stood at about 103% of last year's sales. However, we witnessed some moderation in gasoline demand to about 91% and 95% in the month of November and December '20, respectively. ATF continues to take the hardest hit with sales of only 53% in October '20 in comparison to last year's volume. However, it has improved to about 61% of last year's volume in the month of December '20. Coming to some of the new business initiatives in petroleum retailing. In December '20, IndianOil has launched the XP100, India's highest octane gasoline, that offers better engine power and efficiency for the high-end cars, reduces greenhouse gas and tailpipe emissions. I'm glad to inform that all our refineries are now producing XP100, and it is available at 26 cities of India. We will be further expanding the network. Further, in December '20, 5 kg free trade LPG cylinders, FTL, was relaunched with a new brand name, Chhotu. Customers can buy the Chhotu cylinders either directly from the distributors or any appointed point of sales like Kirana stores, local supermarkets, retail outlets, et cetera. You would have also read in the newspaper a couple of days back that we are also now launching aviation gas which is used by the flying clubs, which was presently imported, but now we will be producing it at our refineries. And the emphasis of the management is now on product differentiation, either new products or existing products with higher specifications. During the calendar year '20, IOC added 296 kilometer to its pipeline network, namely 102 kilometers in Baitalpur section of Patna-Motihari-Baitalpur pipeline and 193-kilometer long Durgapur-Banka section of augmentation of Paradip-Haldia-Durgapur LPG pipeline project. With this, total network of IndianOil pipeline stands at 14,864 kilometers. Despite lockdown, 1,435 kilometers of lowering of pipeline was achieved during the calendar year 2020. Talking about numbers. The average price of crude Indian basket during the quarter was $44.65 per barrel. This represents an increase of 4% from the average price of the immediate preceding quarter, that is Q2 FY '21. The crack spreads for gasoline and gas oil remained weak, and that was the reason for lower refining margins. But as you can see, the -- even the Singapore GRM was at $1.22 per barrel during the third quarter. However, of late, the MS cracks are now touching $3 per barrel, and HSD cracks are nearing $4.5 per barrel, which is in fact a signal towards a smart recovery in the periods to come. In the petrochemical spread -- space, the spreads have improved during the quarter. Spreads for polymers in this quarter, at about $651 per tonne, was 20% higher than the previous quarter, which was $541 per tonne and about 54% higher than the corresponding quarter of FY '20, which was at $423 per tonne. In case of PTA, the spread during the quarter of $146 per tonne was about 25% higher than the previous quarter. The same was 21% lower than the corresponding quarter of FY '20. With respect to MEG, the spread in the current quarter was about 23% higher than the previous quarter and 69% higher than the corresponding quarter of FY '20. This quarter, IOC has registered a profit after tax of INR 4,917 crore. We are going through a period wherein refining margins are at unprecedented low level. However, higher marketing margins for petroleum as well as petrochemicals have helped to soften the blow of low refining margin environment. Further inventory gain of INR 2,630 crore has also helped in boosting profitability for this quarter. From a 9-month perspective, the profit after tax is INR 13,055 crore as against INR 6,499 crore in the corresponding 9 months of FY '20. Higher inventory gains during the 9 months, along with the increase in petchem volume as well as better margins, have contributed to increase in profits in the first 9 months of this fiscal. Revenue from operations during this quarter is INR 1,46,599 crore against INR 1,15,749 crore in the preceding quarter of this year. So let me briefly touch upon the performance of major verticals during Q3. First, refineries, the throughput during the quarter was at 17.86 million metric tonne with a capacity utilization of 101.7%. Sustained rebound in demand of petroleum products during the third quarter has helped in achieving full capacity utilization of refineries. During Q3, distillate yield was at 79.5%, and fuel and loss was at 9.1%. IOCL refineries have registered a GRM of $2.19 per barrel during the current quarter. The normalized GRMs after the shipping of inventory impacts and factoring in price lags for the quarter is $1.25 -- $1.24 per barrel. Our refineries have performed in line with Singapore benchmark margin, which was at $1.22 per barrel. Coming to pipelines. The capacity utilization of our pipelines was about 92.2% during this quarter as compared to 73.4% in the Q2 of FY 2021. Resumption of economic activities post upliftment of COVID lockdown has led to increased demand for fuel and subsequent -- and consequently improved capacity utilization of our pipeline. Our pipelines continued to generate stable returns, giving an EBITDA of about INR 1,699 crore during this quarter, which is higher than the preceding quarter on account of higher throughput. On the marketing front, the petroleum product sale during this quarter was 21.23 million metric tonne as compared to 17.22 million metric tonne in the preceding quarter. As discussed at the beginning of the call, with near normalization of economic activities, demand for gasoline and gas oil has picked up. On a 9-month basis, the petroleum product sales were lower in FY '21 by about 15% only in comparison to corresponding 9 months of FY '20. The marketing EBITDA for this quarter stood at INR 7,130 crore. This includes an inventory gain of about INR 1,700 crores. The petrochemicals. During this quarter, the business reported EBITDA of INR 1,954 crore as against INR 1,211 crore in the preceding quarter. Similarly, while comparing with the current 9-month performance with that of corresponding period of last year, there has been an increase of about 77% in EBITDA. The improvement in petchem profitability is driven by a combination of the increase in production volumes, along with improvement in margins. In respect of borrowings, the borrowing level as of 31st of December '20 was at INR 72,451 crore as against INR 91,505 crore as on 30th of September '20 and INR 1,16,545 crore as on 31st of March '20. The above includes lease obligation of INR 7,760 crore as on 31st of December '20, which has been classified as borrowing. The reduction in borrowings during the quarter has been partly driven by reduction in government dues for LPG and kerosene. The outstanding receivables from government at the beginning of the quarter -- beginning of third quarter was about INR 9,100 crore, and that has come down to INR 4,300 crore at the end of the quarter. We are confident that the balance receivable will also get liquidated perhaps by end of this year, considering the availability of sufficient budget. The rest of the reduction is mainly attributable to reduced working capital requirements. I will end my briefing here, and now we will take your question. Thank you very much.
[Operator Instructions] We have a first question from Mr. Pinakin Parekh from JPMorgan.
Sir, my first question is on understanding the petchem business now. Yes, the spreads were very high for naphtha crackers, but we also have seen a sharp increase in volumes [indiscernible] on multiple petchem facilities. Can you give us a sense of how the petchem volume should pick up over the next few quarters and which product categories that would be there? And my second question is on the new refinery at the...
Sorry, Pinakin, to interrupt. Actually, your voice is not very clear. So you will have to repeat the first question also.
Sure, sir. Sir, my first question is, if I look at the petchem business, it has been a sharp improvement, both on volumes and margins. Now margins were very strong for the naphtha crackers. But sir, I just wanted to understand better the outlook on volumes given that IOCL has multiple petchem facilities which are under construction, in terms of how will the petchem volumes evolve over the next few quarters and which product categories will we see this.Second is, sir, more clarity on the new refinery that has been approved by the Board, in terms of when would the CapEx start. What -- is it only going to be a pure refinery? Or will it eventually involve petchem? Would the company be open to investing a part -- the Middle East into the refinery?
Yes. So first question, our petchem facilities are largely same as of now, except that Paradip polypropylene facility is now running at around 50% to 55% capacity only. So we are only regaining the volumes which were there in the last year, and that is helped by the crack spreads on polymers also. But going ahead, considering that our PP at Paradip is underutilized because of the shortage of fleet, we are also planning to import propylene to increase the capacity utilization of our -- such facility. So largely, the product distillate remains the same. Our new projects are -- there's still some time to get commissioned at various refineries at Barauni or Gujarat. So largely, these facilities will continue. Only thing, MEG at Paradip will come most probably in October '21. So that will get added in '21/'22 year, which has a capacity of 357 KTA. Now on your question of new refinery, so that is a 9 million metric tonne refinery, and we have a petrochemical integration of about 5.5% there. And polypropylene facility is -- and we failed to come up at present. But we also have a plan to increase the petrochemical integration at that refinery in perhaps the second phase, but that will definitely entail more CapEx. But we will -- we are looking to increase the petrochemical integration at that refinery in future. Does that answer your question completely?
Yes.
We have a next question from Sabri from Emkay Global.
Congratulations on a good set of numbers. I have 3 questions. The first one is relating to your petrochemical segment itself. So you reported close to INR 2,000 crore of EBITDA in Q3. And looking at the spreads, there has been recovery, but we are still probably near the mid-cycle in terms of petrochemical deltas. So is it fair to assume now that the petrochemical on a sustainable basis -- of course, there will be risk regarding the global scenario. But based on the current scenario, is it fair to assume that you would be doing close to INR 8,000 crore, INR 9,000 crore of petrochemical EBITDA every year?
Look, that is a factor of the spreads. But assuming that the current spreads prevail, yes, then this assumption may be a valid assumption because our focus is on increasing the utilization of our facilities. And then the profit depends upon the cracks available.
Right. Second question is on this hydrogen policy. So this will be implemented, at today's budget, that stated that it would be implemented from FY '22. So you have also started some pilot regarding hydrogen CNG. And also, hydrogen manufacturing, I think, IOCL is looking in a big way. So anything you want to add on this, what your plans are on this new hydrogen business?
We have got very ambitious plan because hydrogen is considered to be the cleanest fuel. So we have various plans at our R&D center, which is a flagship center among the oil industry and even in Asia. It's working up a lot -- a whole lot of things on hydrogen, but perhaps it is too premature to divulge more details on that. And perhaps it is also too premature considering that it will have some gestation period. And the profits of hydrogen may not immediately be captured in a year or 2.
Okay, sir. And third question is on your -- on the LPG subsidy scenario. So right now, the prices have gone up significantly. I think Arab Gulf prices have reached around $600 per metric tonne. And since 6, 7 months back, almost the LPG prices, both subsidized as well as nonsubsidized, were somewhat aligned. But again, I think some division has taken place. But of course, the subsidized prices are not reflected anymore. So what is the scenario right now? So you have started suffering any underrecovery on the LPG front any -- compared to what it was 6 months ago. And right now, what would be the portion of total consumers which are like -- which are getting subsidy? I mean, if you have got around 10, 12 crore customers, of which -- how much would be like customers would be eligible for this subsidy, considering that LPG prices [indiscernible]?
So initially, post this pandemic, the prices had softened in line with the crude prices also. But then as you know, the LPG prices get hardened during winter months. So that is why this hardening was there in recent months and which will continue perhaps for 1 more month. And we are seeing the prices to soften in the months forward. But since May of this year, at Delhi, there has been no subsidy. And likewise, at many cases, there was no subsidy. So the subsidy was only at the distant, far-flung places, and for which the government is fully compensating us. So there has been no underrecovery on LPG front. And considering the small volume of subsidies, but there is no apprehension of the same remaining unpaid for a very long time. So as I said, we are hopeful that our GOI receivables perhaps may get liquidated by end of this year.
Sir, last -- this January also, you didn't have any major subsidy, what you are saying, right?
At Delhi, no, and also similar markets, no. So wherever the distant places are there, they're only the subsidies there, for which we launch the claims and we input the receivables, and we are confident of recovering that very fast now.
So just a very rough -- it's the same question, just one last thing. Just a very rough cut ballpark of out of your total LPG customers, how much sort of this would be -- the subsidy eligible ones would be how much on the percentage terms?
I do not have that data right now, but then we can provide you separately.
We have a question from Mr. Sumeet Rohra from Smartsun Capital Limited.
Sir, very heartening to see your -- our marketing performance has reported very good set of numbers of INR 7,130 crores. Stripping off the inventory gain also, we've seen very strong numbers of INR 5,400 crore. So sir, can you please throw some light on marketing? How do you expect this performance to continue, particularly in this environment where people are very concerned about the government not cutting excise? So that would be very beneficial for our investors to understand our marketing performance. Sir, secondly, just touching base on the point which the Finance Minister made in the budget yesterday regarding the asset sale of the pipeline business of IOC and other companies. Sir, it's very heartening to see that you added actually 350-odd kilometers, as you mentioned, to 14,800. So sir, can you please help us understand on this asset pipeline plan? Because -- is my understanding correct that the value per kilometer pipeline could be about INR 6 crore to INR 7 crore, which effectively means that INR 1 lakh crore could be the value of our pipeline, which is our market cap today. Your highlights on this will be very helpful to us, sir.
Yes. So first, on marketing margin, so while presently, the prices -- because of a sharp increase in the prices in the recent past post Saudi Aramco's announcement of 1 million barrels per day voluntary cuts up to March, the prices had hardened to some extent and -- but then we expect that perhaps post-March, this hardening of the prices may not sustain. And because the fundamentals are weak for crude oil demand, so we expect that the prices will get softened. And we will have a comfortable scenario as far as marketing margins are concerned. On your second question of pipeline asset monetization, in fact, you are very correct when you say that the value of our pipeline is to that extent. Even if you look at the EBITDA figure from the pipeline segment, you reach at almost this similar valuation. And we were contemplating why our market capitalization is so low and what could be the measures for increasing the -- sort of unlocking the real worth of our assets. And in that direction, this asset monetization concept of pipeline has been mooted. So we will experiment initially with perhaps a small stake offloading through asset monetization tool, but this is only at a preliminary level. But definitely, I agree with you that our assets have a huge potential and a lot of investors who are looking to invest in our pipeline assets. And that will unlock the value of our assets.
So sir, if I understand correctly, what -- my estimate is that the value of each kilometer of pipeline is between INR 6 crore to INR 8 crore. So that understanding is correct, right, sir?
I would not like to put any value to that as of now. So -- but then definitely, even if you put up, say, EBITDA multiple on our pipeline EBITDA earnings, perhaps you can estimate the value of our assets.
We have our next question from Mr. Avadhoot Sabnis from CIMB.
Yes. Am I audible?
Yes.
Yes. So basically, again, the question relates to the new refineries.
A little louder, please.
Can you hear me now?
Yes. Yes.
Okay. As I said, 2 aspects, sir. Exactly, I mean, I think the press release pointed out that we may need to seek approvals of NITI Aayog and stuff like that before you start to work. Could you just clarify exactly what kind of approvals are required and by whom? And what is the time line you're looking at before you actually start working on the project? And...
I'm sorry, Avadhoot. Actually, still, your voice is not very clear. So if you can be little louder.
And a little slow.
And a little slower.
Okay. Okay. Firstly, as I said, I think the press release mentioned that you may need to seek approvals of NITI Aayog, okay, before you start to work on the refineries. So if you could clarify exactly what kind of approvals are required by which bodies for setting up that refinery? And when do you expect all these approvals to be in your hand? And as I said, when the catalyst will actually start to work on the refinery, okay? And secondly, in terms of financing, in terms of how serious are you about external investor? Because if you are -- actually want to get it done, I would assume the fastest way to get it done is putting it on your own balance sheet. Bringing in Chennai Petroleum, I can understand the sort of the sentimental logic in terms of they own the land and stuff like that. But of course, sir, we look at Chennai's own financials, make it quite clear they will really struggle to put in their own sort of contribution to it, which could create a problem for you going forward. So that was the second question, as to what is the logic of putting it in a JV rather than in your own balance sheet. I'll stop here.
So first, about the approvals, since this is a joint venture refinery, approval of DIPAM and NITI Aayog is required for putting up a joint venture by a public sector unit. So these approvals will be required. As far as the other statutory approvals are concerned, we already have the environmental clearance, and the consent to establish is expected very shortly. So the only approvals perhaps which would require is the DIPAM and NITI Aayog approvals, and we believe this being a public sector project should not be a problem. Now you are also correct that it was perhaps not possible for CPCL to put up this project of this magnitude on its own balance sheet. So that is why we have done a JV with CPCL. The debt equity is 2/3, 1/3, and the equity part will be contributed 25% each by CPCL and IOCL. And balance 50%, we will scout for a strategic or financial partner. But till the time we identify such partners, the balance equity will also be funded through quasi-equity instruments. So then this -- that induction of a partner will take its own time in the future. Does that answer your question?
I mean, I had -- maybe I had a more philosophical question as to why are you looking for a partner in the first place.
Well, we are looking for a partner because definitely, this project -- we have this project, and we may also have some future projects, not necessarily refining, but also petrochemical, also renewable pipeline. So we have huge CapEx program going forward. And so we are trying to conserve our money to the extent possible, at the same time, not stopping the CapEx plans of the company. And these are generally the ratios definitely into doing that.
If I may just add, is it possible to give now the broad -- I mean, just to reiterate the CapEx level for this year and next year, at least a broad number?
The CapEx for this year was about INR 26,233 crore, including our JV subsidiaries. And though till December perhaps, we have done about 64% of that CapEx only. So let us see. We are trying very hard to complete that CapEx for this year. Definitely, we are not going to exceed for this year. And next year also, we expect the CapEx to be perhaps within this range of INR 25,000 crore to INR 30,000 crore.
We have our next question from Mr. Vivekanand S. from AMBIT Capital.
Can you talk about the ethanol blending of fuel and blending of biodiesel? Now that the targets have been advanced by the government, what does it mean for us? Is it just a pass-through? Or are there any implications on our CapEx and working capital both with respect to government receipts?
So this -- even with the present blending norms, it is a pass-through, and it is going to be the same way even with higher norms of blending. So no implication on the company as such.
So just to clarify, sir, do we recover both the CapEx as well as the OpEx? Or is it only the CapEx or OpEx?
So for ethanol blending, we do not put up any CapEx. We source ethanol and only blend with our fuels. So that does not entail any CapEx. And the price differential is definitely a pass-through or a surrender, whatever the case may be.
Right. So the 2G biorefineries that we invest in, those are small projects, I understand, 2G ethanol. For that also, we get recovery from the government receipt?
No. No. No recovery on those projects from government, but those projects are being put up on their own viability or strategic decision.
Okay. And how do those projects become -- I mean, how do we earn return on that CapEx? I mean, I'm not able to understand that, sorry to stress.
No. No. As I said, it is both viability as well as our strategic decision to diversify into the energy basket. So -- and therefore, potentials which are available. So -- and considering our volumes, those projects are of very small scale.
We have a question from Mr. S. Ramesh from Nirmal Bang Equities.
My first question is, can you give us some idea about the progress you are making on your compressed biogas projects and when you'll start getting the benefit of that? And how will the pricing and economics work in terms of the margins you earn on that bio-CNG?
So you started with CBG, compressed biogas, I believe.
Yes. Yes.
So presently, we are sourcing compressed biogas from the plants which have been put up by entrepreneurs. We have our own plant in a JV with -- that plant is of IOT, which is our JV at Namakkal. So we are sourcing CBG from there also. We are retailing presently from 15 retail outlets, and we are the only company which is retailing CBG from the retail outlets. We are also putting up our own CBG plant at Gorakhpur, but that will come -- take some time to come up. So -- so no -- presently no major CapEx on CBG plants per se. And as far as viability is concerned, so we are -- we have guaranteed a price of INR 46 per kg for the CBG, which we source from CBG plants. And that is viable.
Okay. So in terms of the numbers we hear, what is the eventual number of CBG plants from which you'll source? And can you get a sense in terms of the volume of CBG you'll be sourcing, say, over the next 3 to 5 years? And how much margin you'll earn, say, per kg?
That will depend upon the pace at which the CBG plants are set up. So presently, not many plants have been set up. So even though in own industry basis, more than 500 LOIs have been given by IOT, also more than 300 LOIs have been issued. But CBG plants will take their own time to come up. So we do not expect any sudden spurt in the CBG volumes in the short time.
Yes. So just extending the thoughts on the renewable energy, in terms of your city gas distribution projects, there are big numbers being mentioned in your annual report. So when do you see the benefits of your direct investments and the JVs in the CGD projects showing in your P&L and balance sheet? Can you give us some sense in terms of the volumes you expect to achieve here over the next 3 to 5 years in the CGD?
You are mentioning about CGD, I believe, not CBG, no?
This is on the city gas distribution, where you got the licenses from the PNGRB.
The city gas distribution. Yes, city gas distribution, we have 17 here on our own plus 23 in joint venture up to 10th round. We are having a CapEx outlay of about INR 15,000 crores -- about INR 16,000 crore of CapEx. And -- but then again, CGD penetration, at least in the domestic, is little time-taking. So immediately, again, like CBG, we do not expect any immediate contribution from these CGD utilities in a very short time.
Okay. Just one last thought on the monetization of the pipeline assets. Like have you done any proprietary work? Because GAIL has already got subsidiary accounting for the pipelines. So you want to bring in some financial investors there to experiment the stake sale. Do you have any similar plans to transfer some of your pipeline assets to a subsidiary? How do you plan to go ahead in terms of laying the groundwork for transferring any of your pipeline assets?
So in the case of GAIL, perhaps the bifurcation of GAIL was discussed for the last, perhaps, more than 2 years, and it is now materializing. In our case, it is too nascent actually, and we will now work upon it. The idea was only that the potential of our assets must get unlocked, and then we will see to what extent we monetize our assets. But it is at a very preliminary stage.
We have the next question from Mr. Amit Rustagi from UBS.
Sir, my question relates to the pipeline monetization. We have been considering pipeline assets as one of the core for -- strength of our business. And if you monetize some of these pipelines, don't you think that the strength of the business will get affected and competition will also get the equal edge, which we have right now today? And the second thing, what are we planning to do with this money? Is this money to be distributed to the shareholders back in the form of dividends? Or would it be redeployed back into the refining business?
So as I said, this is at a very preliminary stage. We have not thought about the model which we will adopt. One model could be InvIT, and it is not necessary that we do 100% stake sale of our -- such assets and not necessarily enter all pipelines together. We may resurrect 1 or 2 pipelines to begin with. And in any case, the operation and control of the pipelines will remain with us. We will not let it go from our hands. Further, our pipelines are mostly dedicated from our facilities to the market and -- in the case of product and from ports to our refineries, in the case of crude. So we do not think it is of any use to the competition because the decision to give products from our refineries is with us only. So we do not think that it will have any adverse impact as far as -- from the perspective of competition.
And sir, what will we be doing with the cash which we'll generate through this route?
This -- the purpose of asset monetization is to boost the CapEx by the CPSEs. So this will help us in boosting the capital expenditure by us. But then if we adopt the InvIT model, yes, initially, whatever monetization we do, that will be available to us for doing further CapEx. And then the option is with us to what extent we retain it for doing the CapEx or to what extent we distribute.
Sir, but don't you think that monetizing pipelines and then putting money in the [ refineries ], that may be a further bad decision because of the performance of the refining businesses?
So we haven't told that we are going to put up in refineries. But I said, we are scouting for a whole lot of projects ranging from petrochemicals, renewables, hydrogen, et cetera, et cetera. So definitely, we will like to put that money only in more viable projects or more profitable projects.
We have our next question from Mr. Varatharajan Sivasankaran from Systematix Share & Stock Limited.
Sir, I have 3 questions. Firstly, LPG, typically, like we have seen in the past, when international prices grew up, the subsidy limit for the year gets achieved and then the retail prices are increased. This time around, what we observed is that the subsidy provision still remains, and you have already started increasing the retail prices. So is there a change in the thought process of the policy?
I'm sorry, I am not able to hear you properly.
Yes. Is it better now?
Yes. It's better.
Yes. Typically, for LPG in the past, what we observed is that when prices go up, the subsidy limit for the year gets almost exhausted and then you raise the retail price. This time around, what we observed is that the subsidy is still there, but you already started raising the retail prices. Is there a change in policy or in the thought process?
Actually, the issue price of LPG is decided by Government of India. So they have -- they are informing on a month-to-month basis that -- what should be the issue price based upon the market-determined price based on the formula, which is there. So as I said, since May '20, there has been no subsidy in Delhi and similar markets. But at other places where perhaps the freight incidence is more, there is some subsidy, which is claimable from Government of India. So the change of issue price from month-to-month is a government decision, and that is being communicated to us.
Okay. Sir, second question on the LNG import contracts which you had in the past. Currently in Ennore, whatever you're reporting is only under those contracts or are you also reporting spot?
I couldn't get you.
So LNG imports at Ennore, you had entered into some contracts. So what is the current mix of imports? Is it all those contracts or do you have spot as well?
So we have certain long-term contracts, and we are taking gas against those long-term contracts. Are you talking about customers or talking about the sourcing of gas?
Sourcing, sourcing, sir.
Sourcing. Yes. So we are taking gas as per those contracts. And so -- but I could not understand your question properly.
Is there any spot volume as well in Ennore, sir?
Pardon?
Any spot volumes in Ennore?
Spot volumes, spot volumes at Ennore?
Yes.
Okay. I didn't know -- the long-term contract quantity is sufficient to cater to the Ennore demand. So we have -- at various ports, we have spot plus contracts. So -- that we see from time to time, which is beneficial to take at each port.
Okay. My last question is on working capital, sir. The prices of crude has actually increased in the last quarter, so is the case with the prices of products. But we have had a reduction in working capital. Was there a significant destocking from there?
Again, I think you should repeat your question, Varatharajan, because it's not being properly articulated.
Yes. Basically, you had incremental crude prices go up in the last quarter as well as product prices. But you have had a fall in the working capital, as what you mentioned initially. So is there a major destocking on your volume or inventory has been cut somewhere significantly, either product or crude?
Yes. You are right. Our inventory levels for both crude and products are lower than what was there as on 31st of March '20, and that is also helping us to reduce the working capital.
Would you be able to give the volume, sir?
Pardon?
Would you be able to give us the volume?
Volumes?
Yes. That's right.
So as on 31st of December '20, we have total 15 million tonnes as against 19 million tonne on 31st of March '20.
This is crude or products?
Put together. So -- but if you want breakup, that can be given separately.
We have our next question from Mr. Manikantha Garre from Axis Capital.
I have 2 questions. First one is on the Nagapattinam new refinery, 9 million tonne, which was mentioned at INR 31,500 crores of CapEx. Can you please give us what amount of that INR 31,500 crores belongs to dismantling of existing 1 million tonne refinery? And what is -- what portion of this is going towards the petchem unit? That's the first question?
Manikantha, I think you should come back again on this question. It's not very clear.
Okay, sir. So it's mentioned that INR 31,500 crores is the CapEx for the 9 million tonne refinery. Does that include costs for dismantling the existing refinery? And what portion of the...
Dismantling the existing -- you mean to say dismantling the existing refinery?
Yes, sir.
That's -- maybe that is included in the site development expenses. I do not have the details right now. That may be a very small amount.
Okay. And what portion of this is towards the petchem unit that sir has mentioned?
Petchem integration I mentioned, 5.5%, but cost thereof separately, we can give you separately.
Okay. So why I'm asking this question is, sir, if I look at Paradip cost for a 50 million tonne refinery as of FY '16, I'd say that it is -- that costed us around INR 35,000 crores. I'm just trying to understand what configuration difference is there between Paradip and Nagapattinam refinery that are [ in recovery ] currently?
Okay. But then that was about -- approval was about 10 years back for Paradip, I imagine. So...
The final cost is INR 35,000 crores.
INR 35,000 crore was the final cost, and the final cost for PPR that is made after 5 years may be something different. So approval-to-approval, if we compare, so this was against INR 30,000 crore of Paradip, which is now to INR 31,500 crore as of now after 10 years. But then these details can be given to you separately.
Sure, sir. My second question is what -- can you give us the status of Ennore-Tuticorin pipeline? At what percentage it is...
We plan to commission the complete pipeline by February '22.
Understood. And if I can squeeze in one question here. I see that there is slight increase in LNG volumes quarter-on-quarter basis. Was there any new customer addition during the quarter?
That's from -- that is a regular feature, actually. But if you are asking about Ennore, no fresh customers.
We have our next question from Mr. Vinit Joshi from Goldman Sachs.
Sir, am I audible to you?
Yes.
My first question is on petrochemicals, okay? Can you give us your current capacities and the breakup between the various products? And how it would look like, let's say, 2, 3 years down the line?
So I -- perhaps that -- this was also the first question of this con call. And as I mentioned, our product slate continues to be the same as was there last year. Only that this MEG will get added at Paradip in October '21 this year. And we mentioned 367 KTA of capacity and -- 357 KTA. So otherwise, we have presently LAB at Gujarat, Linear Alkyl Benzene at Gujarat, PX/PTA at Paradip and polymer -- that naptha cracker at Panipat. So those capacity continue as such. And PP at Paradip, again, whose utilization is less, and we plan to import propylene to increase the capacity utilization. And MEG will come in October '21.
Okay. And sir, on the pipeline monetization plan, will there be -- what kind of tax implication would that pertain to in terms of capital gains? If you can provide some like directional color in terms of like you're thinking about that in terms of driving this monetization?
Okay. So the provisions are already there, and you are aware of the tax provisions. So those will get retracted. So now I don't have a figure of how much we will do, for which pipeline we will do, what will be the value, what will be the capital impact from that. So I cannot give you further details on that. But then definitely, the tax provisions, whatever is there, have to be complied with.
Okay. And last question, sir, in terms of your EV charging rollout, I mean, can you provide some color around how many stations we already have EV charging? And what's our plan for future?
So EV charging, exact number of stations, I do not have right now. But we can give you separately. But then that still constitutes a very small proportion of our operations. So I think from a financial analysis point of view, in the immediate year, perhaps no major thing.
Is there a medium-term target that we have, that, let's say, 5 years or 10 years down the line, what percentage you would be looking to electrify?
I do not have presently. We will give you separately.
We take the last question from Mr. Vidyadhar Ginde from ICICI Securities.
So my first question is, can you give the cost of your crude inventory in December?
December valuation was -- the closing rate was $47.42 per barrel.
Okay. And has the volume -- I think in September, you had mentioned crude inventory is around 9 million tonnes. Is it similar or lower?
So it is lower. Now the earlier person also want it. So you can take it down. Crude is about 7 million tonnes as on 31st of December, which is lower from the earlier level.
Yes. Significantly lower. And the second question was on this polypropylene. When do you expect these issues to be resolved? And when do you expect to run the plants at full capacity? And is it because the propylene yield in the refinery is lower than expected? Or is it with the expected yield also, the planned [indiscernible]?
Yes. One was that some feedstock was being diverted towards gasoline pool, considering that gasoline demand is very robust. Second, we had shut down also a FCC unit in Paradip, so that -- because of that. But then even if these things are taken care of, still we have some spare capacity of PP, for which we are planning to enter into long-term contracts for propylene imports.
So when do you expect it for the next capacity?
The first parcel, we have already started. The first test parcel, we have already started, but that is a small volume. So based on this experience, we will then line up our long-term contracts.
Okay. Sure, sir. Yes. And the last question is on the pipeline. Is it certain that you want to follow the InvIT option? Or could it also be listing the pipeline in a subsidiary and telling a small statement maintaining [indiscernible] or majority including it? Could that -- or is it fairly certain that you're going to follow the InvIT option?
So nothing is certain as of now. As I mentioned, this is at the preliminary stage, and we will look at the models which are available.
Sure, sir. So could you also consider maybe listing -- hiving of your petrol stations into a subsidiary and maybe sell the 26%? Because that could really -- because I think that is probably your best effect, most important offer, which is valued even in today's environment when the refining outlook longer term also, there are some question marks. And we've seen some transactions happen in the U.S. where 7-Eleven paid naturally for -- some 3,900 petrol stations. Though most of them are probably owned, they paid a massive amount. So could that be a possibility at some stage, I mean, not your petrol station in those subsidiaries?
Presently, it is not on our radar. But the possibility of any such thing to unlock the value cannot be ruled out.
Now I would like to hand over the call to the management team for closing comments. Over to you, sir.
Thank you for participating in this con call. So we look forward to meet you again after the next quarterly results. Thank you.
Ladies and gentlemen, this concludes your conference for today. We thank you for your participation and for using iJunxion conference service. You may please disconnect your lines now. Thank you, and have a great day.