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Oil India Ltd
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Good morning, ladies and gentlemen. Welcome to Oil India Q3 FY '23 Earnings Conference Call, hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Reena Shah from Elara Securities Private Limited. Thank you. And over to you, ma'am.
Thank you. Good morning, everyone. On behalf of Elara Capital, I welcome you all to the Q3 FY '23 conference call of Oil India Limited.We are pleased to have the senior management of Oil India Limited, led by Mr. Harish Madhav, Director Finance and Mr. Pankaj Kumar Goswami, Director, Operations; Dr. Manas Kumar Sharma, Director, Exploration & Development. At the onset, the management will brief on the results, and this will be followed by question-and-answer round.So now, I request the Oil India management for their opening remarks. Over to you, sir.
Good morning. I'm Pankaj Kumar, Director, Operations, Oil India Limited. I welcome you all to the post Q3 financial year 2023 earnings call. Actually, Director, Finance, Harish Madhav is not here as of now because of his some personal problem.So in brief, I would like to highlight that the company's performance in last quarter both in physical parameters and financial form has improved, both quarter-to-quarter basis as well as on year-to-year basis. The company has declared 100% second interim dividend of INR10 per share for the financial year '23, resulting in total dividend declared paid during the year to INR14.5 per share.And with this, I would now request, Sanjay Choudhuri, our Chief Finance for the opening remarks.
Thank you, sir. Good morning, dear friends.At the outset, I would like to thank Elara Capital for organizing today's Investors Conference. Like our Director Operations sir, Mr. Goswami mentioned that Director, Finance, Mr. Harish Madhav is unable to join us today due to a [indiscernible] in his family. So the team is being led today by our Director, Operations, Mr. Pankaj Goswami.Now coming to the company's financial results for Q3 FY '23, which was published on 10 February, 2023, I would briefly give some indications about the performance of the company both in physical and financial terms.Consolidated turnover of the company for the 9 months ended 31 December has shown a record price of 50%. That is going up to INR32,821 crores from around INR20,000 crores. The consolidated profit after tax for 9 months ended 31 December, 2022 is at INR10,259 crores against INR5,668 crores in the similar period last year. The consolidated profit after tax for the 9 months ending 31 December, 2022 stands at INR7,874 crores against INR4,191 crores, which is actually an increase of almost 88%.Now coming to the standalone results and production front. The crude oil production for Q3 is 0.807 MMT versus 0.754 MMT, which is an increase over the same period last year by over 7%. And for the 9-month period, the increase is in excess of 5%. As far as natural gas is concerned, for Q3 FY '23 it is 806 MMSCM versus 793 standard cubic meters from Q3 of FY '22, which is an increase of around 2%. And if you go on the 9-month basis, the increase is around 4%.On the financial side, the highest ever profit after tax is in Q3 FY '23 on strength of better pricing, as you all know, and the higher output of natural gas and crude oil, which I just mentioned. Debt for acquisition of additional share [indiscernible] has been fully repaid. Profit after tax for Q3 FY '23 is INR1,746.10 crores versus INR1,244.9 crores in the same quarter last year.For the 9 months ending 31 December, 2022, profit after tax recorded a growth of over 120% to INR5,022 crores versus INR2,257 crores for the same period last year. The turnover has increased by 27%, which has gone up to -- and for the 9-month period, it has increased by about 63%. Earnings per share for Q3 has also increased to INR16.1 per share as [ DA ] sir already mentioned. The Board of Oil has declared a second interim dividend of INR10 per share, and this is in addition to the first interim dividend of [ INR4.5 ] per share for INR4.5 per share, which was declared earlier. The total interim dividend declared in the year up to now is INR14.5 per share, INR14.5 per share.The financial performance of Numaligarh Refinery, profit after tax of NRL for the 9-month period is [ INR2,933 ] crores versus [ INR2,429 crores ] for the 9 months last year. NRL GRM for the 9-month is $19.71 per barrel versus $10.40 per barrel in the corresponding period last year. EPS of NRL for the 9-month period is [ INR9.94 ] per share against [ INR16.5] per share for the 9 months last year.With these opening remarks on the performance of the company, we are now open to the question-and-answer session. Thank you so much.
[Operator Instructions] the first question is from the line of Probal Sen from ICICI Securities.
I had a couple of questions. One was that in our earlier few quarters, we have mentioned about slightly ambitious production goals for both oil and gas. In the context of the last few quarters' performance, is there any change to that guidance? Can we get a fresh guidance, let's say, for FY '24 oil and gas as well as for FY '25, if it's available?
Yes. Very happy to announce that the performance of the company in terms of physical performance is also going up. As we have mentioned from the last year, so there is a year-on-year growth in production in front of both oil and gas. So this year, we are supposed to get a production -- crude oil production figure of 3.2 MMT and similarly also in the gas we will be achieving more than 3 BCM. So, this was the target. And as of now, we are at par with the target. Similarly for the next financial year, we have a target of 3.4. And probably with this progress, we have a very good terminal production at the end of the year, and we'll be able to achieve that. So, these are the milestones we have already set, and we are actually going in the line of the milestones. So, we'll be definitely achieving that.
Just to clarify, sir, 3.4 MT was for the oil and what's the target we have for gas production for FY '24?
Gas production is also in the same line. It is 3.3 BCM.
3.3 BCM. Okay. Sir, on the NRL performance, just wanted to clarify again that the GRM number mentioned is excluding the excise duty benefit, the $19.7 a barrel?
Yes.
And earlier, you have indicated that the excise benefit is in the range of around $10 to $11 a barrel. Is my understanding correct?
Yes. But then we have worked on exactly for these 9 months, but there are kind of that kind of rate. Yes.
On an annualized basis, roughly, that is what it works out to, correct?
Yes, kind of.
Okay. Last question from my side, if I may. On an overall CapEx perspective, sir, a run rate of around, what, INR3,000 crores to INR4,000 crores is expected to be sustained for the next few years?
Yes. We expect we will achieve it this year.
This is excluding whatever is -- NRL, we will be spending on their expansion plans, right?
NRL is separate.
NRL is totally separate. This would, of course, include our investment part in NRL.
Including our equity contribution to that CapEx?
Including our equity contribution. We should be very much [indiscernible] [ INR500 crores ] to [ INR600 crores] in that.
What would be the consolidated debt on the book, sir, as on date?
Debt on the books, along with NRL?
Yes.
As on date, it is around INR17,500 crores.
INR17,500 crores. I'll come back if I have more questions.
The next question is from the line of Varatharajan Sivasankaran from Antique Limited.
Okay. So the benefits we have on the auction in front, both on oil and gas vis-a-vis a higher realization and what are the contributions? [ How was the ] realization in the last quarter?
These were higher realization and higher production. Pricing being a larger -- sorry?
Any numbers you can share, sir?
Your voice is a little faint.
Any numbers you can share, sir? What is the realization -- higher realization vis-a-vis the benchmarks?
For the 9 months, the realization has been around $100 per barrel. Of course, this is subject to what we have [Technical Difficulty]. So realization net is around [ $70 ] to [ $35] per barrel after the additional excise duty.
Sir, what would be the auction premium kind of the -- depending on the benchmark, you got on account of [indiscernible] and on what volumes?
We are [indiscernible] of the issue, and we have our plans which we will be unfolding in the next fiscal because you see a lot of groundwork has to be done on this before we really take it forward, and we have to be out on the closing calls. So taking everything into consideration, we expect to go -- start the auction process next fiscal.
The next question is from the line of Nitin Tiwari from YES Securities.
My question is a book keeping one with respect to your other operating expenses. So, there is a sharp fall on a sequential basis versus the previous quarters. What is the reason for that?
For the operating expenses?
It's about [ INR113 crores ] versus [ INR531 crores ] in the previous quarter.
Just one second. Just give me one second. Our operating expenses has actually come down due to two reasons. One is that we had lesser write-offs during the quarter. That is the major reason why it's come down. And expenditure on CSR, it's not linear quarter-on-quarter. Whether the projects come up, we will do the spending because of the more expenditure on CSR and due to lesser number of write-offs, this has come down.
Any indication you can give us for the fourth quarter in terms of well write-offs? Like how is that....
That would be an impossible task. Nobody will be able to give it to you. [indiscernible] to that.
Understood, sir. So, I mean I just wanted to understand if you have written off most of the wells that we could write-off for the year.
No, if it was written off, obviously, I would have shown in our books, not hide it.
Okay. And sir, secondly, my second question with respect to the production guidance that you earlier shared that we would be looking at more than 4 million tonnes of production and more than making 4 BCM of gas production post FY '25. So are we sticking to that target? And in that backdrop, there was a slight decline in gas production in this quarter. So any particular reason for decline in gas production?
Yes. In fact, we are in line with the 4 million target. So, our production year-by-year is going up. And by '25, definitely, we'll be able to reach 4 million. And regarding your question for declining gas production in this quarter, basically, as you know that we have one of the major customers is the tea customer. So tea gardens in Assam and [indiscernible] today. So in that case, what happens is demand is seasonal. So during this period, the tea gardens do not operate and they do not pick up the gas. So accordingly, we have to cut down the production for this period, which is a common phenomenon. In every year, this goes in a cyclic sort of requirement. So that is the other reason why [indiscernible].
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
I have a question on the Numaligarh Refinery. So if I look at the production throughput, it has increased from 614 million tonnes last year in Q3 to around 800 million tonnes this year. At the same point of time, GRM has also increased from $12.5 per barrel to $13.50 per barrel, but EBITDA is more or less flat, or has seen a marginal decline to INR1,122 crores. What is the reason, which is sort of underpinning the reduction in the EBITDA despite the increase in throughput and margin?
This is largely to the state excise duty that we imposed on the products on diesel.
Basically, [indiscernible] diesel. So anything on diesel actually....
Largely inputs the refinery. And the additional excise duty, additional state excise duty on diesel has impacted the EBITDA.
So the additional excise duty is not part of the gross refining margin and it's actually below the cost line after the gross refining margin?
Yes.
Okay. Understood. And the second question was about the sort of the target for 3.4 million tonnes and 3.3 BCM. So from this year to next year, which are the key projects which will help us underpin this additional production?
So, basically, these are the new areas within our own areas. So, we have been expediting our drilling activities in those areas. Under Mission 4 Plus. we have to accelerate the drilling program. So accordingly, we have identified high things and all those things. We have accelerated our drilling activity and accordingly, the production is going up. So this is where we'll be achieving 4 million target by '25. And at the same time, we are also happy to announce that we have new discoveries within our old areas. Recently, we have some new discoveries in the name of [indiscernible] that is [ Northeast ] only. So, these are the new things coming up. And with that, we are hoping that we'll be able to achieve more production in the coming days.
Right, sir. Would you be able to elaborate on the progress on the 5 key projects that we have identified? And how -- what are the, basically, stage that we are in towards the increase in production?
These are the oil fields. We have 5 identified oil fields, Baghjan, Balimara, Lakwaga Gaon [indiscernible] and one in Rajasthan. So these are the 5 fields where we have accelerated our drilling. And accordingly, from each and every field, the production figure is going up. So the number of wells that drill corresponding to previous year, the number is more. So when we drill more development wells, we get more oil. That is the way we are going up. And we have identified 70 wells to be drilled for the next year. So, we hope that with that, we'll be able to get more production.
Could you repeat the number of wells that you said for the next year?
70. 70 wells for the next year.
The next question is from the line of Sabri Hazarika from Emkay Global.
Congratulations on a good set of numbers. So, I have a few questions. First one pertains to your consolidated accounts, the share of profits from association JV. It was like at a positive run rate. So in Q3, it became negative. So can you tell us details on which asset, basically, these negative numbers have come?
Actually, what has happened, you see in some of the assets that we have acquired overseas have not been able to perform as per our expectations when we acquired them. That is largely, say, the Suntera asset in Nigeria, the License 61 asset in Russia. Now these three assets have not been able to perform as per expectations. They're like -- and this has not been the right start in our basket. So due to this, we have recorded some amount of loss again in these assets because the production is on the downside, the expenditures -- some of the expenditures, operating expenses are still there. So this has led to a loss. And another some small part of this loss is also due to the change in the dollar to ruble exchange rate, which is we think with the weakening of the ruble. So these three -- the major factors being License 61 and Suntera Nigeria and to some extent, the dollar exchange rate of ruble [indiscernible].
Right. But the main Russian assets, they are performing normally, right?
Perfectly fine. The production is -- the businesses are doing good there.
Okay. And any -- Pankaj, sir, I mean, pending dividend right now since -- or are you able to like repatriate that?
See, the amount that is there in OIIPL is about $177 million, which is there at the Singapore level.
100 and -- sorry, sir, 100 and..
At the Singapore level, we have got about $177 million....
$177 million. Okay.
...at the Singapore level. And at the Russian level, we have got about $533 total. Oil share is about $178 in VIPL and about $200 in TIPL at the Russian level.
Okay. So Russian level, $200 million is pending and pending to be delivered and $175 million is pending to be delivered to Singapore, right?
Yes. About 170 and $250 million all share -- and all share at the Russian level is [ $66 million ], $56 million or $82 million. Same put together, it's $120 million. At the Russian level, it is about $120 million odd.
Russian level $120 million and Singapore level $175 million.
Yes.
Okay. And when is it expected? Any headway in terms of payment channels? Or do you think that it can...
We haven't had the Board Meeting right now. We are expecting a Board Meeting in the first week of March or so. Once the Board Meetings are there, all the partners decide. Something should be coming in the next month.
Okay. Second question pertains to your -- this -- I think it was like asked before also, but just wanted to know more specifically your sundry expenses in particular. So, that number has actually changed significantly. So it used to be like -- I mean, Y-o-Y, it has not changed much. But Q-o-Q, if we see, so it has gone up significantly in the -- I mean, it was like around INR64 crores in Q3 FY '22. Then it went up to INR200 crores to INR300 crores to INR350 crores kind of run rate during Q4 to Q2 '23. Now again, it has fallen to around INR100 crores. So what is the reason behind that? Is it just CSR or is there any other heads also?
Actually, you see -- if you go through our financial statements, these other expenses estimation, although as per the national [ hedge US input ], all expenses are on other expenditure. Okay. So, this is not sundry expenses. This is actually all expenses, which includes your well write-offs, your exchange loss or gain, which will include your CSR activity. So all these [indiscernible]. And in terms of -- it also includes your consumption of materials and contract costs. All right. This is the natural hedge for other expenses.But what has made the difference is that due to lesser well write-offs this year, that has made the difference. And like you said that has jumped above only to compare over the last 5 years or 6 years. That is because, naturally -- because the wells are becoming exclusive year-on-year, right? So when you write-off a well, the expenses also become higher year-on-year.
Okay. And what was the ForEx loss this time versus Q2?
ForEx loss this year versus -- ForEx loss this time is about INR49 crores. And in Q2, it was about INR290 crores.
INR290 crores versus INR49 crores. Okay, sir. Okay. And your provision was negative because of some Mizoram well write-back, right?
Yes. Actually, what happened -- yes, last year, what happened, we paid provision based on the estimated income tax [indiscernible]. It came out to be little less. So there is no admin there.
[Operator Instructions] The next question is from the line of S. Ramesh from Nirmal Bang Equities.
Sir, when we talk about the special additional excise duty in Numaligarh Refinery, there is a difference in the excise duty in the P&L between consolidated and standalone of about INR700 crores, sir. Is that the amount of special additionalExcise duty attributable to Numaligarh Refineries?
Yes. Numaligarh, [indiscernible]. If there is any other factors there, [indiscernible]. Numaligarh has a cumulative figure. Okay. What we have noticed is that there is added to this figure [indiscernible].
So in terms of this additional excise duty, it looks like the oil marketing companies are levying this additional excise duty on the refinery transfer pricing for all the standalone refiners irrespective of whether it is exported because this additional excess duty was meant on exports. So, I would like to understand the thought process under which this is being done and what are the standalone refineries doing in terms of addressing this issue because it kind of [ shades ] the refining business contrary to the spirit of that duty which the government imposed on exports? So can you share your thoughts and the thinking of the industry and what's exactly happening there?
What's happening is that [indiscernible]. And the issue is that, see, being a PSU in a country like India, which is 80% oil dependent on imports, I think it's a fair deal that when the prices are high, some parties are passed on to the consumer, right,? Some mechanism is worked out. Like in the past, it worked out for the upstream companies is that we are getting a net realization of around [ $75 ]. So it will be moderated -- that will be moderated on a fortnightly basis by the change in the SPCD. And one thing is very clear that there's no aberration on that. If you just follow what has happened from July onwards, you will see what is left on the table for the special companies around $75. It's not just gone up dramatically from the -- not dramatically from there. So if we raised wrong, it is predictable, and that's what's been happening.
Okay. The next thought is in your pipeline business, you have a capital allocation of INR1,500 crores on the asset side, but the earnings are not measuring up to the expected return. When do you see that giving a normalized return? Why is the return so low there?
What has happened, we are in the process of signing the contract for transportation. It is -- the negotiations went on for a long time because we had a huge investment in the pattern expansion and modernization. Because the pattern is very old. You see we have to modernize it appropriately. Total reserves had to be done. So the exploration has remain from our end. Now, these are all run on a cost run basis. So there is negotiation on all of the refineries. And we are on the verge of selling the contracts for the same. Once that is in place, the income from transportation would show a considerable change. And what has happened prospectively for rigs pumping, the new rigs have already been applied. And soon you'll see that -- the income for transposon is going to go up.
Okay. So finally, if you can share some thoughts on whether there is any loss from the Indian JVs in your share of JVs? And how is your HPOIL-CGD JV progressing?
HPOIL JV is progressing well on both the plants in Kolhapur, as well as your Kurukshetra-Ambala. And the progress is as per the plan and a large number of CGD stations have also come up in both the GAs. And in Kurukshetra-Ambala, we have been able to deliver to the households also. And in Kolhapur, delivery to houses have started and commercial delivery of piped gas is also starting in Kolhapur. Another JV, it is in Assam Gas Company Limited. There also we have started some CNG stations in Assam, and the Government of Assam is now running 100 city buses on CNG. So, this is one achievement in that front.
So if you look ahead, say, 3 years to 4 years or 5 years from now, what is the kind of revenue and EBITDA or PAT you can expect from this City Gas business?
You see, this is a tough one because this is all dependent on what kind of gas prices rule, natural gas prices rule. Once the investments are done, we have to really take a hit because it's an open market. It all depends on what the next JVs doing. The open market is competitive. So right now, tell we've actually made the investments, we know what kind of a [indiscernible] moat we have build up, what kind of consumer, how many consumers we have. It will be premature to comment on that right now.
Okay. And on the JV share, can you comment because there is a Brahmaputra factor, which I think possibly is under pressure. So other than the African entities you mentioned, is there any loss from any Indian JVs or associates, including Brahmaputra factor in the share of JVs?
No. Nobody has ever done this.
The next question is from the line of Vikash Jain from CLSA. The line for the current participant has dropped off. We'll move on to the next question. That is from the line of Vishnu Kumar from Spark Capital.
Sir, my question is on the GAIL network, the pipelines. When do we expect that -- over the next couple of years, when do we see that GAIL will connect into our gas network? Is that likely to happen? And do you see any timeline there?
See, this whole networking is going to be through IGGL, which is progressing as per schedule. So once the grid is in place, the IGGL grid is in place, then the gas business is really going to boom in the Northeast region, specifically Assam. So they have the target, I think by '25, '26...
By end of '23, there will be some amount...
....will be completed. So maybe by end of '23, early '24, the business will take off. And fully fledged in a years time maybe, after that.
As of now, the progress is more than the targets.
Okay. About 12 months from now, we should have the line connected with our networks?
Yes. We are expecting not full-fledged, but to some extent, yes, definitely.
Got it, sir. Slightly medium-term question. Earlier, you used to mention that there are not enough offtakers. So, our production ability on gas is kind of capped because of that. Now that this line is going to come up and currently, if you see a lot of gas is going to be ferried all the way from Petronet, Dahej, to get into the, let's say, UP, West Bengal or whenever the LNG terminal comes on the Eastern Coast and probably will come. But can -- will we have the ability to produce far bigger volumes and supply into the central part of the country and is that possible? Is there any plan on this side? Let's say, in the next 4 years, 5 years, do we see that we can step up gas production materially? Is that possible?
Yes, you are right. Once the grid is in place, so definitely, we'll be able to add more gas to the grid. So, that is the plan as of now. So once the lines are actually ready, then we'll be able to -- because it has to go up to the Northeast, remotest corner because our production is from the extreme Northeast, near Arunachal Pradesh. But the present grid is going through the central part of Assam. So it is to be extended a little bit more than only able to directly connect our production to that grid. So there is some -- there will be some gap. As we have said that the first part of the line will be by end of next year, by mid of next year. But the remaining part, where we have to connect to our grid, our main production -- producing area, that will take some time. So once those are in place, definitely, we will be in a better shape and able to produce more. And in fact, considering that also, we have taken up some infrastructural projects so that we can produce more gas in that area.
So when can we connect into the network or rather, as you said, from Arunachal Pradesh, if we need to move all the way to Assam, when can we complete the line?
One line is under construction. So it will be completed by end of '24. So by that, we'll be able to get the gas produced in Arunachal Pradesh into Assam.
The distance is not much. I mean, Arunachal and Assam are [ neck to neck ]. We're talking in terms of 100 kilometers.
53 kilometers.
53 kilometers.
Problem is that it is a fully forest area. We have to take lots of permissions. Then the other part is thickly populated. So all those areas are having some constraints and there are some very tough rivers where we have to cross. So, these are the hurdles there. So though the line length seems to be very small, but the -- because of those hurdles and getting approval and walking inside the forest area is a difficult job. So that is why it is taking time.
Understood, sir. Sir, understood on the problems that you mentioned. Let's say, 2 years, 3 years down the line, if you're able to complete the pipeline, how much incremental production can be available, provided that these lines and the evacuation capacity assuming it comes through, what can be the production technically that you can take out, which you kind of said?
We are expecting, as you know, that we have a very ambitious target of production of gas like 5 BCM. So once we achieve that, definitely, we will be able to achieve that because all these are interconnected. I cannot produce gas unless and until I have these infrastructures. These are capable, but we are not being able to produce because of these infrastructure issues.
Understood, sir. Does this mean that you can just about -- you'll have to additionally drill more wells and you can quickly bring it up? Or does -- you need further large-scale investment to go from where you are to, this 5 BCM?
Yes. No, we would need very large investment.
Very large -- this is not very large. Some of the infrastructures are always in space. But the pipelines, these are the difficult jobs to do. See, investment is not that big loss, but the execution is difficult. That is an issue.
I mean, more in terms of the production capability, let's say, if the pipeline comes through, I understand the problems that you highlighted. But if the pipeline comes through to increase production, is it going to be more straightforward where we -- existing fields, we just drill additional wells and bring production?
It won't be projectized as another project getting more gas. In natural course of business, the gas will come.
Those projects are already in place.
Other things are in place. You just drill the well, the gas comes up.
Got it. My second question is with this Kirit Parikh Committee Report. Any thoughts on it? And when do you expect the numbers to come? And one more point is that the global indices are now coming down. So anything that your side you have recommended to the government that given that the indices are coming down in the next 12 months, anyways prices are going to come down, so do we see a change in the thought process? Or broadly, your thoughts we want to hear on what is your stance on this and what is going to happen?
Actually, the recommendations like we all know by the Kirit Parikh Committee has been put forth. And the government has not yet come out with a -- how far the recommendations are going to be implemented. As and when implemented, we will come to know. As of now, there is no clear indication as to how much of the report is going to be accepted or which way it is going to go. The international prices are coming down on gas, yes. But then still, they will be -- we are much higher than what we were about, say, 6 months to 9 months back, right? The prices that we're looking forward, the forward prices are definitely higher than the trailing 9-months basis.
Understood. When do you see the final notification to be coming out, sir?
That is really a very tough one. We will hopefully know.
The next question is from the line of Vikash Jain from CLSA.
I wanted to check on dividends. Firstly, on NRL, have we received any dividends so far? Or is it something which comes out in the fourth quarter typically?
Yes. Up to now, we have received in excess of INR760 crores.
Sorry, how much?
INR760 crores plus.
Okay. And is the trend that -- I mean, they have an interim or something which comes out in the fourth quarter in terms of when we carried...
There have been 2 dividends up to now. One, we give at the end of the first quarter.
Which was the final dividend.
The final dividend -- which was the final dividend. Last year final dividend came, and now we have got -- up to now we've got INR760 crores.
INR760 crores, which you have got, which is already a part of the 3Q number you say?
Yes. Q3 numbers, right -- Q2 number. Sorry, I stand correctly, Q2 numbers.
Sorry, Q3 numbers, right? Yes. Yes.
Q2.
Q2. So Q1 and Q2 has the NRL dividend, you say?
Yes.
And the other thing was our own dividend payout. So far as a payout perspective, given that the EPS that we've been able to do is about $46 in the first 9 months, the payout is about 30% or so. By the time we end the fiscal, is it likely to be, typically, what it has been around the 50% kind of a range? Should we expect it to be that? I mean...
See, I can give a straight answer to that. But seeing the trends earlier, then you can make your assessment from that, right? It's not fair for me to give you a straight answer to that, right?
Sure. But I mean -- so 50% kind of a number is what we have seen historically as a practice maybe in the regulation?
We are likely to follow [ international ] practices because that will depend on the [indiscernible] guidelines because given that is 30% and 90% to be paid during the third quarter. So that will be met in any which way. And there might be something in excess of that as well, okay? We're expecting to pay in excess of the 30%.
Sure. Absolutely. That's what makes sense.
The next question is from the line of Naresh Katariya from MoneyCurves Investment.
My question is on the Numaligarh Refinery, where we are expanding from 3 million to 9 million, Numaligarh expanding. Does it have linkage for crude and also to evacuate the refined products? So are there pipelines and also is crude available in the vicinity of the....
No, it is not available in the vicinity. They are going to import it from Paradip. And as far as your question is concerned, it is largely going to be -- some part is going to be through the product pipeline, which has been expanded by Oil India. And another mode of transportation is going to be through the PM's Gati Shakt program. There's a multimodal transport which is coming up in Jogighopa. From there, through the waterways, it will be exporting to Bangladesh, as well as exporting to Bhutan and Nepal and Myanmar.
Perfect. My second question is on the realizations. I'm sorry if this question was asked. I joined 10 minutes late. So, we have realized $88 for this quarter. I believe the windfall tax was kind of working towards $75, $78. So is there something exceptional we have done to generate $88? You have $88.37 as realization accrued in Q3.
Yes. In Q3, yes. Q3, this is before. 9 months is $100 before the windfall tax. And in Q3, $88 before the windfall tax.
Okay. So $88 is before.
It is before -- [indiscernible] $100 is for the 9 months.
Perfect. Sorry. I stand corrected. I'm done.
$100 is for Q1. That means the average is $100. Q1 was [Technical Difficulty].
Got it.
The next question is from the line of Vipul Shah from Sumangal Investments.
Sir, thanks for the opportunity and congratulations for a very good set of numbers. So, my question is regarding the expansion of Numaligarh Refinery from 3 to 9. So excise duty will be -- benefit will be available for expanded capacity also?
Yes, that is the indication. Yes.
And sir, on your website, the financial analysis. So Slide 5, so in quarter 1, Numaligarh Refinery's gross refining margin is 30.39. And in quarter 2 and quarter 3, they are 30.84 and 30.48. So can you explain how it works, sir?
Because if you see the Singapore GRM, in the first quarter, there was a huge jump in the Singapore GRM. As a result of that, the GRM rollover was very high. Now the GRMs have come down to normal levels, including the Singapore GRM. So this is a falling metric.
And these figures are exclusive of the excise benefit, right sir?
Yes. These are exclusive of the excise benefit, yes.
Okay. And sir, any cost or any provision for the last year's fire at our gas field? Can we expect any cost in subsequent quarters?
Nothing as of now. There is no indication as of now. Because we have already provided -- year before last year, we provided INR450 crores -- INR449 crores for Baghjan. And that we feel is all that we need to provide for as we speak.
So that field has started to production, sir?
The production is coming from that field only. So, we have drilled number of wells in that area, and the production is mostly gaining -- our gas production is from that area only.
So this well is fully operative as of now?
Nothing to be worried.
The next question is from the line of S. Ramesh from Nirmal Bang Equities.
This is Ramesh here again. So if you can shed some light on how you see the returns from the refinery expansion in Numaligarh, and what kind of underlying assumptions you're making on the margins?
See, with a three-fold increase in production capacities, obviously, we expect the margins on the profitability to go up in the same ratio.
Okay. And if you look at your supply of gas through Brahmaputra cracker, you're getting a feedstock subsidy. So is there any negative impact on your P&L because of the subsidy being offered for Brahmaputra Petrochemicals?
No. That has been taken up totally separately. It doesn't affect our profitability. In fact, it adds to our profitability. We'll get more dividend because their profits were because of that.
Similarly, if you're looking at your investments in oil and gas exploration and production, what is the kind of reserve accretion you have seen this year? And if you had to assume the current oil prices, what is the return on capital employed you can generate on the additional investments you're making on increasing the production in oil and gas?
See, our accretion has consistently been in excess of 1 over the years, and we continue to have that kind of accretion. And what was the other part of the question?
So in terms of the investments you're making in expanding oil and gas production, assuming current level of oil prices and the gas prices, what's the kind of return on capital you would expect from these investments.
See, we will be in a much better position to give you a proper reply to this question once we know the results of the huge investments we are making in OLPs. Once the OLP fields show the results and we strike oil in 1 or 2 areas, then the return on capital is going to be humongous.
The next question is from the line of Somaiah V. from Spark Capital.
First question is on the debt number. The INR17,500 crores number that you said, can we just have a breakup? What is it that the stand-alone...
Can you be a little louder? Your voice is very faint.
Yes, sir. Am I audible now, sir?
Perfectly now.
Yes. I was looking for the debt breakup, the INR17,500 crores number. Sir, just looking for what is the standalone number? What is it at NRL, if any and then the international assets, sir?
INR11,244 crores for oil, standalone. And the consol basis about INR18,000 crores. INR17,800.
So what would be the NRL level debt, sir?
NRL level debt?
INR2,300 crores.
NRL level debt, INR2,300 crores.
Got it, sir. So the NRL expansion, the expansion CapEx of INR28,000 crores, INR29,000 crores what we plan to spend, how much has been spend so far? How much so far has been our equity contribution? How much is NRL from NRL's...
The contribution has not yet being made. And around what -- about 20% -- about INR8,000 crores has been spend up to now. Out of the INR28,000 crores, INR8,000 crores was gone.
And this has majorly come from NRL, not much of equity contribution?
This is all debt and internal accruals. Large internal accruals of NRL.
So, of this, if I understand it right, so, so far INR8,000 crores has been spent and it's by and large by NRL, which includes INR3,300 crores of debt, rest by internal accruals of NRL?
Right. Spot on.
Got it. Sir, and what is the trajectory here, sir? I mean, how do you plan for the next couple of years in terms of this expansion CapEx?
The expansion is slated to be completed by '24-'25. And the progress is going as per plan. So, we have full confidence that it would be operational by '25.
Okay. Got it, sir. And these NRL payouts that we got in the first half, this is after factoring the expansion CapEx. So what is our expectation of NRL payouts in next couple of years, I mean, given that they have the expansion CapEx to be done so?
Right. So there might be a dip in the NRL CapEx. But the fact remains that we are expecting much better dividends from [ ISC ] in the forthcoming year. Last year's, the dividend has been lower, right? So in total terms, the dividend received from these companies should be in that -- overall, the range will be maintained, I feel.
Okay. Got it, sir. And the INR750 crores that we received in the first half from NRL, so that payout ratio is more or less in line with what we have been getting in the previous years? Or there is a slight dip because of this expansion?
More or less in the same range.
Okay. One final question. What is the NRL's maintenance CapEx at current capacity?
Sorry?
NRL's maintenance CapEx at current capacity?
That figure -- we don't have that figure right now. We can get back to you. We will just note down. We'll get back to you on this one. We don't have the figure right now. Okay. We will send across the figure. [Indiscernible] is noting it down. We will send it across to you.
The next question is from the line of Kirtan Mehta from...
And maybe this will be the last question, please.
Sure, sir. Ladies and gentlemen, we'll be taking the last question. That is from the line of Kirtan Mehta from BOB Capital Markets.
You just mentioned that there is a INR450 crores provided on the Baghjan field, but note number 8, first, to sort of the additional assessment of around INR1,200 crores of flows by the committee set by the Supreme Court and the matter has been sort of referred back to the National Green Tribunal. So what do we expect about this additional sort of cost of INR1,200 crores? Do we contest this? Or are we in line with it?
No, no. The fact remains that, see, if we would be accepting it, it would be a provision or contingent liability, right? It is neither a provision, nor a contingent liability. So, obviously, we're not accepting the dividend from the -- of our financial statements.
As of now, so we are not in agreement with the way the Supreme Court Committee has set up the costs. And what are our key objections against this? Would you be able to share more color on that?
Our objection is that whatever compensation was to be paid has been already paid by us and whatever bio-diversification measures had to be done -- because this case is about 2 years old. These 2 years, we have worked very hard on that area. And all -- and we have taken multiple projects for the bio-diversification there. And as a result of that, we feel that it has gone back. The Flora and the fauna is back in its original state as we speak.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Reena Shah for closing comments.
On behalf of Elara Capital, I would like to thank management and participants for joining this call. I would like to hand over the call to management for the closing remarks.
Yes. Thank you very much for your very active participation.So, hope that we'll be continuing our journey in this way, and we'll be getting more and more profit in the coming days. This is the expectation. Our production is also going up. We are expecting the production -- the total profit figure will also go up in the coming days. And we need your cooperation all the time. Thank you Elara Capital for organizing this investors conference today. Thank you. Thank you, everyone.
Thank you so much. Thank you.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Elara Securities Private Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.