Q1 2027 Indian Oil Corp Ltd Earnings Call
Speaker #1: Patient: We have with us Mr. Anuj Jain, Director of Finance. Mr. Nitin Kumar, ED Company Finance and Treasury. Mr. Pramod Jain, CGM Treasury. Without much ado, I would like to hand over the floor to Mr. Anuj Jain for his opening remarks.
Speaker #2: Thank you, Mr. Madurajan. Dear investors and analysts, a very good afternoon to all of you. I take this opportunity to welcome all of you to the conference call organized by us, post-announcement of the first quarterly results of financial year 26-27.
Speaker #2: I thank each one of you for joining the call. I trust you have had an opportunity to review the results we have posted on our website, exchanges, and the updates that have been shared with you.
Speaker #2: In today's call, we would like to walk you through our performance for the quarter gone by, provide some insights on the broader macroeconomic context, and also share with you the strategic initiatives we are pursuing to strengthen our position as India's largest energy company.
Speaker #2: Before I move to the operational and financial highlights, let me briefly touch upon the evolving geopolitical developments and their implications for the global energy markets.
Speaker #2: Since the last call, the global energy landscape has continued to evolve at a rapid pace. While the announcement of a 60-day truce between the United States and Iran in mid-June shone signs of moderation in concerns over supply disruption, the overall environment remained marked by geopolitical uncertainty, evolving tensions, and the reconfiguration of global trade and energy flows.
Speaker #2: Recent renewed military escalations in the Middle East have once again brought the security of critical maritime energy corridors—particularly the Strait of Hormuz and the Red Sea—into sharp focus.
Speaker #2: Reminding us that volatility remains inherent features of the global energy ecosystem. Energy security now depends not only on resource availability but also on resilient supply chains diversified sourcing and operational agility in a complex global environment.
Speaker #2: I'm pleased to inform that Internal has once again demonstrated these trends by ensuring uninterrupted energy supplies across the country, with reliability and resilience. Internal continues importing secure, reliable economically competitive crude oil, grades from diverse countries, while managing challenges of high market volatility logistics challenges in terms of ships, insurance, freight costs, among other things.
Speaker #2: Amidst disruption, we diversified our sourcing by increasing imports from other geographies like Russia, Venezuela, Brazil, and even from African countries, thereby ensuring continuity of crude oil imports to maintain our planned refinery operations.
Speaker #2: The spot imports for the quarter stand at about 84%, again 50% in the last year. As regards our operational performance for Q1 financial year 26-27, we reported a net loss of $2,661 crore, compared with the profit after tax of $1,1378 crore in the preceding quarter, that is Q4 of financial year 25-26, and profit after tax of $5,689 crore in the corresponding quarter of financial year 25-26.
Speaker #2: The reported loss need to be viewed in the context of heightened geopolitical tensions and ongoing conflicts. Which led to significant volatility in the international crude and product prices, and exerted considerable pressure on marketing margins on retail queues, particularly impacting the quarter's profitability.
Speaker #2: Revenue from operations during the quarter stood at $2,759,72 crore, against $2,328,55 crore in the immediately preceding quarter of this year. The sequential increase in revenue was mainly driven by higher product prices.
Speaker #2: The revenue for the corresponding quarter of financial year 26 was $2,186,08 crore. While the global environment remained uncertain, with geopolitical developments continuing to pose challenges for energy markets, our commitment remains steadfast.
Speaker #2: We remain fully committed to safeguarding the nation's energy security and ensuring uninterrupted energy supplies across the country. While navigating these challenges with operational resilience and supply chain agility, at the same time, our focus extends firmly beyond the immediate environment.
Speaker #2: We continue to maintain a strong emphasis on long-term strategic growth initiatives, aimed at strengthening our core businesses expanding our capabilities across the energy value chain, and supporting India's growing energy requirements.
Speaker #2: Friends, now the operational and financial highlights will be briefed by Mr. Nitin Kumar, Executive Director of Corporate Finance and Treasury. Over to you, Nitin.
Speaker #3: Thank you, sir. Real investors and analysts, very good afternoon. I may note that today's discussion may include forward-looking statements which are based on currently available information, assumptions, and expectations, and are subject to uncertainties that could cause actual results, performance, or achievements to differ materially.
Speaker #3: From those expressed or implied. Participants are advised to refer to the company's latest findings with regulatory authorities for a more detailed discussion on the risk and uncertainties.
Speaker #3: Before turning to our numbers, let me briefly touch upon the macro backdrop against which this quarter played out. The U.S. Federal Reserve has held its benchmark rate in the range of 3.5 to 3.75 percent through the quarter, with elevated inflation readings keeping the door open to further tightening rather than cuts.
Speaker #3: On the domestic front, the RBI's monetary policy committee has similarly kept the repo rate unchanged at 5.25 percent, maintaining a neutral stance. Even as it flagged upside risk to inflation from elevated crude prices and global geopolitical tensions, taken together, these signals a continued higher yield environment for the foreseeable near term.
Speaker #3: Coming to the forex markets, the rupee remained volatile during Q1 of this year, depreciating to a quarterly low of about 96.83 per USD in mid-May.
Speaker #3: On U.S.-Iran escalations, and the state of our news closure, before recovering to around 94.67, aided by RBI's measure and U.S.-Iran ceasefire announcements. Rupee is currently trading in the range of 95.96 per USD, and continues to remain under pressure driven by global geopolitical developments.
Speaker #3: As for PBSC report, MSNHS consumption grew a healthy 7.5 percent sequentially over the previous quarter, reaffirming the resilience of India's mobility and industrial demand even amid calibrated pricing adjustment in response to volatile global markets.
Speaker #3: ATF volumes, however, contracted by around 5 percent, reflecting suspended international routes following recent airspace closures and softer air travel on the back of higher fare fares.
Speaker #3: LPG volumes declined by roughly 20 percent, largely a structural outcome of tighter regulatory norms on commercial supply and the government's demand optimization measures. Monsoon after a weak start has since picked up its momentum, though distribution across regions remains uneven.
Speaker #3: The progress of the monsoon will remain an important variable for rural demand, agriculture output, and consequently for fuel consumption patterns in the agri and mobility segments.
Speaker #3: The average price of crude that is Indian basket during this quarter increased to 100.74 dollars a barrel from 83.01 dollars a barrel in the immediately preceding quarter, that is Q4 of 25-26, which amounts to an increase of about 21 percent.
Speaker #3: Due to ongoing U.S.-Iran conflict leading to supply disruptions. Now, let me briefly touch upon the quarterly performance highlights. While we responsibly absorbed a portion of international crude spikes to shield the domestic market from inflationary pressures our overall volume footprint remained solid, uniquely unequally positioning us for rapid margin recovery as global energy dynamics normalize and our optimized product mix takes full effect.
Speaker #3: Talking about the numbers, now let me briefly touch upon the major verticals. Refineries. During the quarter, refinery achieved crude throughput of 19.2 MMT, with a capsule utilization of 109.4 percent in comparison to throughput of 19.7 MMT and capsule utilization of 113.9 percent during the preceding quarter.
Speaker #3: For Q1, 25-26, the throughput was at 18.7 MMT, with capsule escalation of 106.7 percent. Our refineries have achieved lowest ever quarterly fuel and loss of 8.04 percent post-BS6 scenario.
Speaker #3: Pipelines. During the quarter, pipeline has achieved highest ever quarterly throughput of 28.5 MMT, with capsule utilization of 79.9 percent, with a weak 27.7 million metric ton during the preceding quarter, with capsule utilization of 78.3 percent.
Speaker #3: During the corresponding quarter of 25-26, the capsule utilization was about 73.5 percent, with throughput of 26.3 MMT. Marketing. The total sales volume during the quarter was 26.211 MMT, as compared to 27.343 MMT, during Q4 25-26, and 26.328 MMT in Q1 of financial year 25-26.
Speaker #3: During the quarter, 320 retail outlets were commissioned, taking the total number to 43138. Recently, Indian Oil has launched Indian Extra Light Now, a 10 kg composite LPG cylinder offering with express 4-hour home delivery.
Speaker #3: Simultaneously, the popular 5 kg Indian Chhotu cylinder will also now be available on express home delivery, along with 10 kg Extra Light Now cylinder.
Speaker #3: Indian Extra Light Now offers customers a smart LPG experience through express delivery, minimal documentation, seamless digital booking, and enhanced convenience. Launched initially in Pune, Gurugram, Indore, and Coimbatore the offering will subsequently be expanded to other cities in a phased manner.
Speaker #3: Petrochemicals. The sale of petrochemical products including exports during this quarter was 0.768 MMT, compared to sale of 0.901 MMT in the preceding quarter. Gas.
Speaker #3: During the quarter, we registered gas sales of 18,730 TMT, which includes CGT sales of 67 TMT, as compared to total gas sales of 18,140 TMT, which includes CGT sales of 54 TMT during the preceding quarter.
Speaker #3: Renewable energy. Our wholly owned green subsidiary company, Terra Clean Limited, has received connectivity approval of 2.6 gigawatt capacity on central transmission utility, and state transmission utility.
Speaker #3: Project activities are in progress for setting up 100 megawatt wind power project in the state of Gujarat, additionally UPNEDA, which is Uttar Pradesh New and Renewable Energy Development Agency, has allotted 423 acres of land in the state of Uttar Pradesh for development of solar power plant of around 100 megawatt.
Speaker #3: Terra Clean Limited is aggressively exploring commercial and industrial customers across India for providing reliable green power through long-term power purchase agreements under the group captive open access mode.
Speaker #3: Indian Oil is working to strengthen its position at the forefront of India's biofuel and energy transition agenda, aligning with nation's twin objectives of energy security and decarbonization.
Speaker #3: Across hydrogen and green hydrogen, ethanol biodiesel and biogas and sustainable aviation fuel, the corporation continues to scale commercial capacity and deepen its partner ecosystem.
Speaker #3: Capex. During April to June 26, the company incurred a total capex of 6461 crore encompassing investment across verticals. The budgeted capex target for this year is 32,700 crores.
Speaker #3: These investments are aligned with our long-term strategic roadmap and national energy priorities. The major refining and petrochemical expansion projects across Panipat, Borani, Gujarat, and Paradi advanced stage of execution, and are at our targeted for completion during 26-27.
Speaker #3: Phase-wise commissioning of processing utilities offsite facilities are being undertaken in a structured manner to enable progressive capacity buildup and integration. So far as Panipat refining expansion is concerned, it is expected to be completed by December 26.
Speaker #3: Borani by December 26, and Gujarat by November 26. Borrowings. With respect to the borrowing levels, the borrowing as on 30 June 26 was at 1,41,453 crore level, compared to 1,10,668 crore as on 31 March 26.
Speaker #3: The increase in the borrowing was mainly on account of higher working capital requirements. As of 30 June 2026, the company's gross debt equity ratio stood at 0.71, reflecting a comfortable leverage profile.
Speaker #3: After adjusting for financial investments, the net debt to equity ratio further strengthens to 0.51, positioning us well to pursue growth opportunities as of market volatility and maintain financial strength across cycles.
Speaker #3: With these words, I take a pause here and request the actor finance for his further remarks.
Speaker #4: Thank you, Nitin. I would like to extend my sincere appreciation to our investors in all stakeholders for their continued confidence and support. As India's energy landscape evolved, we remain committed to playing a pivotal role in meeting the country's rising energy demand while simultaneously advancing the nation's energy transition objectives.
Speaker #4: We will continue to pursue growth and with discipline, resilience, and with long-term perspective, creating sustainable value for all of our stakeholders. With that, I will end my briefing here.
Speaker #4: We would now be happy to take your questions. Thank you.
Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.
Speaker #1: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Probal Sen, from ICICI Securities.
Speaker #1: Please go ahead.
Speaker #4: Thank you for the opportunity, sir, and congratulations for a resilient performance in a very challenging quarter. My first question is actually a slightly broader one from a capex standpoint.
Speaker #4: The presentation shared earlier by the company very clearly shows that most downstream investments will actually be completed in calendar year 26. So just wanted your view on how you are looking at capital allocation for maybe the next two to three years.
Speaker #4: Will renewable be almost taking up entire amount of focus? Are there any downstream brownfield or greenfield projects that we're still looking at? Just your perspective on how the capital allocation for IOCL would look like, sir, from a two to three-year perspective would be very useful.
Speaker #4: That's my first question.
Speaker #2: Yeah, thank you. As we have known that we normally do a capex between 30,000 crore to 40,000 crores, in a year. And our major expansion are getting over in this year itself.
Speaker #2: But if you see from next year onwards, we still have many pet chem projects where our capex will continue to be spent. As you are aware, we plan to enhance our pet chem intensity from 6.5% to 15%.
Speaker #2: Estimated capex on the same would be around rupees 1 lakh crore over the next five to six years. All these projects are in the various stages of approval.
Speaker #2: So we are but as a thumb rule, various projects are under discussion. Whether it's renewables, whether it is pet chem, biofuels, or we are also you have seen shipping we are trying to acquire few ships.
Speaker #2: So all these put together, our capex should be between 30,000 to 40,000 crores in the next two to three years also.
Speaker #1: Got it, sir. That's pretty useful. The second question was more about from a in this quarter, the GRM that you have mentioned, which is net of SAED, if the SAED or export tax was not there, just as a hypothetical, what would a normalized GRM have looked like?
Speaker #1: If we can quantify the SAED impact on a per barrel basis.
Speaker #2: See, you know, our reported GRM is 15.59 dollar per barrel.
Speaker #1: Right.
Speaker #2: And see, GRMs depend upon many factors, but to be very specific, if you add SAED, it would be around 36 dollars per barrel. For internal calculation.
Speaker #1: That would have been the gross number if we were to include SAED.
Speaker #2: Yes, yes. 36 dollars.
Speaker #1: Got it, sir. One last question, if I may, sir. How much has LPG loss per cylinder reduced in the current quarter, and what was it per cylinder for us in one queue?
Speaker #2: See, as you see that I will give you the month-wise data.
Speaker #1: Sure.
Speaker #2: In the month of June, okay, after the price decision, my under recovery per cylinder was in the range of rupees 665 per cylinder. Which in the month of July, the figures may vary because it was around 475 rupees per cylinder.
Speaker #2: August, it came down because the Saudi ECP came down significantly. And you know that the Saudi ECP came from down from 796 to 592.
Speaker #1: Right.
Speaker #2: And now, in the now it is Saudi ECP has again gone up from 592 to 632.
Speaker #1: Okay.
Speaker #2: So we expect that during this quarter, it should be around 250 rupees per cylinder.
Speaker #1: That would be the average, roughly, is what we're anticipating.
Speaker #2: Yeah, that would be average in Q2. Assuming that the same Saudi ECP continues for the next month as well.
Speaker #1: Understood.
Speaker #2: So the Saudi the under recovery has come down significantly vis-à-vis July.
Speaker #1: Got it, sir. Thank you so much. That was very useful. I'll come back in this.
Speaker #2: But I would also add that everything depends upon the geopolitical situation. You would have seen that we were seeing the downward trend. Suddenly, it has started showing upward trend.
Speaker #1: Right, right. No, no, of course, sir. That is obviously there. Appreciate that. Appreciate that. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.
Speaker #1: The next question is from the line of Sabri Hazarika from MK Global. Please go ahead.
Speaker #3: Yeah, good afternoon. Two questions firstly. Was there any inventory impact in on the GRMs in Q1, and also on the marketing side, was there an inventory impact?
Speaker #2: See, yes, there was a inventory impact on GRMs. And there was an inventory gain on finished goods. So we had impact on both the so if you talk about food side, we had an impact of three to four dollars.
Speaker #2: It was a loss.
Speaker #3: Okay.
Speaker #2: And in case of finished goods, we had a gain. So that also helped us to mitigate our losses. For this quarter.
Speaker #3: Okay, so finished goods gains could be like around six, seven thousand crore. I'm just making an upcut guess based on some of your peers.
Speaker #2: No, it was on a little bit on a higher side because as you know, we are carrying a huge inventory in our system. So it was around 15,000 crores.
Speaker #3: 15,000 crores for the quarter.
Speaker #2: Yeah.
Speaker #3: Okay, that's fair enough. And this was mostly for all the products, right? Petrol, diesel, LPG, everywhere there were price increase.
Speaker #2: Yes. Not because of price increase, there are many other factors. So I don't want to say it was on the price increase. It was on account of the variation in the pricing, you know?
Speaker #3: Okay. Fair enough. And sir, secondly, on your project, so can we see full impact of the refining projects in FY28 in terms of any escalation in GRMs also, or that could take still time?
Speaker #3: I know you have taken it up in the past also, but can you just like, again, revise us on what is the expectation? And also the PX, PTF project, which you have stated that it will commission soon.
Speaker #3: So when that is expected to add to earnings?
Speaker #2: See, as we have said that, yes, most of the projects are going to be commissioned in the Q3 of 26, 27. So our definitely our installed capacity will go up.
Speaker #2: And as you all the time, the crude the refining throughput will come in series. Next year, definitely, it will have a crude projection is definitely on a higher side.
Speaker #2: So we expect in 27, 28, my throughput should be somewhere on 85 MMTPA.
Speaker #3: Right. And any GRM acquisition?
Speaker #2: GRM, you see, GRM has nothing to do with GRM, we will all depend upon the play between the crude oil prices and the product prices in international market.
Speaker #2: So we cannot predict what would be the GRM next year.
Speaker #3: Okay, sir. Fair enough. Thank you so much on that.
Speaker #2: Yeah.
Speaker #1: Thank you. The next question is from the line of Nitin Tiwari from Philip Capital, India. Please go ahead.
Speaker #4: Hi, sir. Good afternoon. And thanks for the opportunity. And once again, congratulations on a very resilient performance. This was a very difficult quarter. So, sir, following on the question of previous participant, once our refinery expansions are concluded, so can I mean, of course, I mean, commenting on GRM is difficult, but can you comment on yield?
Speaker #4: I mean, would it be possible for us to improve our yield over 80% that we usually have from our refinery?
Speaker #2: See, you already know that this is one of the best performance-distributed yield and our losses are also minimum. And we continue to improve it.
Speaker #2: And with the new modern expansion happening, we definitely expect that our GRMs should improve.
Speaker #4: Okay. So, sir, what kind of yields can we expect? Can we expect that our yield would improve to mid-80s? Is that a possibility from 80%?
Speaker #2: I can't give the specific number, but I would say that since IOC will be able to process higher portion of value-added products, the returns are definitely going to go up.
Speaker #4: Okay. Right, sir. And, sir, secondly, I just wanted to understand a little bit on our pricing policy. So previous quarter was, of course, an anomalous one, but I mean, mid-May onwards, we did take some price increase.
Speaker #4: So I mean, given that crisis invest Asia has again cleared up, right? I mean, so where do we stand in terms of, like, you know, petrol and diesel?
Speaker #4: Are we making I mean, losses in these products again? And like, you know, are we considering any price revisions, if you can, like, you know, comment on that?
Speaker #4: And how do we go about understanding your pricing action, if we have to going ahead?
Speaker #2: See, as for the pricing is concerned, it is very, very dynamic. Situation is so dynamic that you can see it is changing on day-to-day basis.
Speaker #2: So if you but what we can say that we remain engaged with the concerned authorities on this issue. And particularly, I talk about the LPG that we are hopeful that we would be getting reasonable support from the government of India on LPG.
Speaker #2: And based on the past experience also, we have seen that government has fully extended support to PSU OMCs. Therefore, on LPG, based on the past factors, we are confident that suitable compensation for LPG under recovery will be considered.
Speaker #2: Yes, there would be uncertainty in the timing of compensation, and the quantum. But we are definitely sure that on LPG part, we are going to get support.
Speaker #2: As far as the other products are concerned, the situation remains very dynamic. And we are many factors affect the pricing. So it depends upon the, you know, the crude cost, the product margins, exchange rate movements, trade market, insurance markets, inventory gain and losses, so many things will be affecting.
Speaker #2: So all these factors would be considered and appropriate decisions will be taken.
Speaker #4: Sure, sir. Sir, lastly, if I may, like, you know, just continue on the pricing question. So what was the increase in the commercial diesel price that we are taking?
Speaker #4: The retail, I suppose, was seven and a half rupees, but how much was the commercial diesel price change, if you may please highlight that?
Speaker #4: And also, what is the portion of commercial diesel sales in our overall diesel sales?
Speaker #2: I will be able to just give me one minute. But see, commercial diesel prices are moving in tandem with the are always moving in tandem with the international market.
Speaker #4: Okay.
Speaker #2: Because the SSG prices for commercial consumers are always into the international market prices. And based on the contractual terms, whatever discounts is being passed as for the contractual terms.
Speaker #2: So it would not so but I would gladly say that even today, the prices have got modified. So for these things, the product prices move on as per the.
Speaker #4: Any indicate any indicative number in rupees per liter that you can tell us which we are charging for commercial consumption?
Speaker #2: See, our if you say 10 to 15 percent of my total SSG volume is bulk volume. So on that factor, if you want to factor in that these prices would be moving as per the international prices.
Speaker #4: All right, sir. Understood. Understood, sir. Thanks so much, sir, for answering my question. I'll get back in with you.
Speaker #2: Sir, if you want to have a specific data, my team would be happy to give you after this phone call what has been the consumer prices in the past three to four months.
Speaker #4: Great, sir. That would be really helpful. Thanks so much for answering my question, sir. I really appreciate it.
Speaker #1: A reminder: anyone who wishes to ask a question may press star and one on the touchdown telephone. The next question is from the line of Vivekanand from Ambit Capital.
Speaker #1: Please go ahead.
Speaker #2: Yeah, hi. Thanks for the opportunity. I have two questions. The first one is with respect to the landed cost of crude. If you can help us understand the buildup of that, let's say the cost of physical cost plus the plus insurance and spray, and how does it compare versus let's say 4Q, or let's say just when the crisis began in March, how much of a premium or discount on the Brent were you getting crude landed in India versus how it is now?
Speaker #2: And has there been any change in trend in the last month also? Is that that would be great if you can help us with that.
Speaker #2: That's my first question. The second one is on the supply chain: what more can you do in terms of, let's say, improving the ability of Indian oil companies to source crude without being at the mercy of market vagaries?
Speaker #2: I understand that there is some JV between the I mean, MOU between the MOPMG and the Ministry of Shipping. Is there any progress there?
Speaker #2: If you can talk about this topic, thank you very much.
Speaker #4: Okay.
Speaker #2: See, whenever we talk about the crude prices, I think it would be very important to benchmark. At what benchmark we were buying before the war happened and what we are doing today.
Speaker #2: So roughly, I can tell you because it keeps on changing on each transaction what we are doing. Pre-war, generally, IOC was buying Brent minus one or two dollars in the market.
Speaker #2: But since the war has started, you all know that the crude oil prices went very high. So we had a procurement cost of around $10 per barrel over Brent.
Speaker #2: During the peak of the war, it keeps on changing. So overall impact, I would say it was somewhere around $10, if you see. So now, but in the month of July again, it came down to two to three dollars per barrel.
Speaker #2: And again, it is going up. So it is moving on Fortnite to Fortnite with a day-to-day basis. But yes, on an overall summary, you can say there was an impact of $10 per barrel on the peak of the war situation.
Speaker #3: Okay.
Speaker #2: And coming to your second question, that what we are doing for the supply chain, I think I would say definitely we have diversified the portfolio.
Speaker #2: You would have seen that we are not dependent on one single source. Yes, Middle East remains to be the main source, but we have diversified our sourcing Russian crude, whether it is West African crude or Latin American crude, all these crudes have a significantly diversified.
Speaker #2: And based on the geopolitical situation, we keep on changing our sourcing strategy. You would have seen that now, even in the past quarter, since the Middle East volume got affected, we have increased our procurement from South America.
Speaker #2: We have increased our procurement from West Africa, Russian, Venezuela, even USA, a few cargoes came. So it was a very diversified procurement strategy which helps a company like Indian Oil.
Speaker #2: To the now, coming to your third question regarding the what is the status of the JV, MOU between MOPNG and Shipping, yes, that is also one of our strategy with even started before the war started.
Speaker #2: We wanted to have a shipping tunnel security as well. So I would say under the ages of MOPNG and MO Ministry of Shipping, 19th on 19th September, a non-binding MOU was signed.
Speaker #2: In this, we Indian Oil shall be exposing to procure four MR vessels to start with. And we are this is a JV where we have other partners, otherwise we have gas partners would be there.
Speaker #2: So this working is going on. Tenders are already out. So we are just being how much we can have a tunnel security by way of this joint venture company.
Speaker #4: That's nice. How much for the detailed answers? Just one follow-up on the first question. So the $10 overall impact that you mentioned this is versus the Brent crude and secondly, does it include shipping and logistics costs, or is it.
Speaker #2: All inclusive. It is all inclusive. All inclusive.
Speaker #4: Are there.
Speaker #4: Okay. Okay. And this is for the overall portfolio, right? Not.
Speaker #2: It is not for the overall portfolio, yes.
Speaker #4: Okay. Okay. Thank you very much.
Speaker #2: Yes.
Speaker #1: Thank you. The next question is from the line of Kesha Soni from Kotak Bank. Please go ahead.
Speaker #4: Yeah. So thanks for the opportunity. I have a question on Ethanol blending. So what is the volume of Ethanol which IOCL sourced in this quarter, and any indicative price of what was the cost on a per liter basis this quarter versus the same quarter last year?
Speaker #2: As per the Government of India policy, Indian Oil has achieved 20% target of ethanol blending. So this is at par with the other oil marketing companies.
Speaker #2: And as far as pricing is concerned, we have different type of ethanol type of ethanol. And each ethanol each product will have its independent pricing.
Speaker #2: On a basket basis, it is blended with the MS and the it is sold to the customers.
Speaker #4: Okay. Understood. And also, I have one more question in terms of combined losses of OMCs. I think during the beginning of this quarter, government was saying that the total losses could be likely as I have 75,000 crores in this quarter.
Speaker #4: But the reported number of all the three OMCs, including IOCL, are significantly better. So any specific reason for that?
Speaker #2: See, there were many factors which helped us. First of all, excise duty was reduced. Prices were increased in a few multiple tranches. There were in the when this figure was given, it was in the beginning of April, but subsequently in the month of June, the prices came down significantly down.
Speaker #2: So practically, we could the impact of June was not that much what we observed in the initial months. And in all you would have seen the Concor all the oil companies had positive inventory gains.
Speaker #2: So all these factors put together helped us to mitigate this situation.
Speaker #4: Okay. Okay. Sure. Thanks. Thanks for the detailed answer.
Speaker #1: Thank you. The next question is from the line of Sanjay Mogam from JP Morgan. Please go ahead.
Speaker #4: Thank you. Thank you. Good afternoon, sir. I just wanted to follow up on the question from the earlier participant. On the 60th of June, sir, media reports suggested the oil secretary saying the OMCs are hitting borrowing limits, sir.
Speaker #4: But if I look at the changes in debt for yourselves and for the other OMCs, that doesn't seem to have been any cash flow stress or any material cash flow stress at all.
Speaker #4: How do I reconcile the comment from the oil secretary on the 16th of June versus what has been reported, sir?
Speaker #2: So see, if you see my borrowings have gone up. If you see on 31st March, my borrowings were 110,000 crores. And on 30th of June, it has gone to 141,000 crores.
Speaker #2: So there was a significant jump within this three months itself, if you see. But nonetheless, I would say my debt equity ratio still because we had an extra we had a very good of financial year 25-26.
Speaker #2: So my debt equity ratio still even after this increase, my debt equity ratio still remains 0.7. So but if you see on the absolute numbers, my borrowings have gone up significantly.
Speaker #2: By 31,000 crores in one quarter itself, but because of the because it is not the first time oil sector companies have seen this type of borrowing levels, we have a banking arrangement to take the money from the banks.
Speaker #2: At a very competitive rate. And to manage the situation. But the situation remains a very, very strong in one quarter if the borrowing goes up by 31,000 crores.
Speaker #4: Perfect. I was just commenting on the fact that the secretary said companies are unable to borrow more. And that sounded like a distress situation, but it like you say, it doesn't look that bad.
Speaker #2: So what I have not seen that shouldn't probably what he would be saying because everybody wants see, money is always available in the market.
Speaker #2: The issue is at what rate you will get. So what he was probably would have meant that they are not able to get the money at the same rates what they were getting if we had a comfortable position.
Speaker #2: Definitely, if you have a if you go to the market with 31,000 crores borrowing in one quarter, your cost will go up. Some each company will have its own profile.
Speaker #2: So in our case, having a very strong balance sheet, we still manage it. But I will not be wrong to say that my interest cost went up from what we were at what rates we were buying before the war.
Speaker #4: Perfect. If I may follow up on the second sort of clarification, historically, when we've seen that crude falls through a quarter, so this quarter, the opening crude and closing crude is way different.
Speaker #4: And crude closing is much lower than where it was at open. And historically, in such situations, we have seen IOCL report very large inventory losses.
Speaker #4: But in this quarter, at least the accounts don't seem to suggest that a material loss has been booked. Is that the right understanding, and how do I reconcile that?
Speaker #2: No, you have to compare the crude prices on 31st of March and whatever after the ASU impacts everything on 30th June. 2026. So on overall basis, this quarter, if you talk about on 31st of March, my inventory was somewhere around 87 dollars per barrel.
Speaker #2: And on 30th June, it is somewhere around 83. So I had an inventory loss on crude this time. And as I said in the first question itself, on inventory on the finished goods side, I have an inventory gain.
Speaker #2: Because the quotes in the international market of gas oil, gasoline, all the products went up. So there we had an inventory gain. But on crude we had a marginal inventory loss.
Speaker #4: Sorry, sir. You said you marked your crude on June 30th at 83, is it?
Speaker #2: Yes.
Speaker #4: Bloomberg it says $70. That's why the confusion, sir.
Speaker #2: No, I don't know about Bloomberg what they said.
Speaker #4: Right. All right. Thank you very much.
Speaker #1: Thank you. The next question is from the line of Saurabh Handa from Citigroup. Please go ahead.
Speaker #3: Yeah. Thank you for the opportunity. So my first question is on CapEx now with most of your refining expansions getting completed this year. One would have expected maybe a moderation in CapEx going forward.
Speaker #3: And one of your OMC peers is also talking about being a little bit more prudent on CapEx and bringing down their CapEx intensity given some of the balance sheet issues.
Speaker #3: Could you comment on that? I mean, you are still looking at 30 to 40,000 crores CapEx going forward. So doesn't this sort of situation maybe warrant a rethink, especially given there is still uncertainty on any support from the government?
Speaker #2: See, if you see Illinois today has an energy basket share of around 9 to 10 percent. If you want to continue maintain this energy share in the family energy basket of the country, and you need to continuously invest and all the investments are definitely going to bring a positive margins to the company.
Speaker #2: See, for the past four to five years, you have seen that we had extraordinary good refining margins for the company. Although on marketing side, we had a hit.
Speaker #2: Now, our as I said in the beginning, we are focusing on Petchem now. There's a huge demand of petrochemicals in the country. So the next cycle of petrochemicals will be done.
Speaker #2: But we don't have as such a targeted CapEx that we have to spend this much. Somebody asked me, I said, in the past, we have done that.
Speaker #2: So that can be but everything would be subject to proper returns. Proper due diligence. There's no as such targeted given to any one of us.
Speaker #2: Everything is evaluated on a profitability side. And then we invest. But I would definitely add that going forward, renewables will be one sector where we will have to invest.
Speaker #2: We have a target of 18 gigawatt renewable power in next three to four years. We have 100 percent owned subsidiary company Terra Clean. Where we have putting a lot of efforts to start our renewables.
Speaker #2: Already four to five gigawatt working is going on at various stages. And so renewables will start going up and Petchem. These are the two sectors which will take my major CapEx in the next three to four years.
Speaker #2: Apart from that, we have other CapEx also, whether it is pipelines, whether it is biogas, whether it is SAF, whether it is green hydrogen.
Speaker #2: So and we are also diversifying into now shipping, so there would be many sectors where we are also investing into battery swapping. Already we have a joint venture company into that.
Speaker #2: So we have also a very profitable company fertilizer subsidiary company. A joint venture company giving us good returns. So there are many sectors where we are investing in our company.
Speaker #3: Thank you, sir. Just to follow up on this, two questions. One, in terms of India's energy dependence, and there has been talk of some focus from the government on maybe investing in strategic reserves.
Speaker #3: And one of your upstream counterparts is setting up an SPR facility. Is there any such directives from the government to you or the OMC?
Speaker #3: Say on, I don't know, LPG storage facilities or any such things?
Speaker #2: See, I would give you a small just snapshot part of SPR. See, today, the existing capacity is around 5.33 MMTP. It is at Visakhapatnam, Mangalore, and Purdue in Karnataka.
Speaker #2: Okay. And there's a target to increase it to 11.83. This target is not for Indian oil. It is for general indicated target for the entire oil and gas sector.
Speaker #2: In the geopolitics. So we are also under discussion to see whether we can also participate in this strategic storage. But as such, there's no target or any straightforward given to us.
Speaker #2: All these proposals are being evaluated on a commercial consideration. And if we find that it is commercially participating in SPRs as well.
Speaker #3: Got it, sir. And just my last question on refining expansions. I think someone else also asked this question. Besides the throughput increase, does this also lead to an increase in complexity?
Speaker #3: And is there any sort of quantification on how much you expect the refining margins from these refineries to increase by? I mean, all else being equal, assuming no change in spread, etc.
Speaker #2: See, even the if you see any even today, the district yield, it all depends upon the type of wood you are buying. But we are seeing the more and more new units are coming.
Speaker #2: Our district yield is going up. Our fewer loss is coming down. So definitely, we can expect better returns or better margins going forward. So if you see even this quarter, we had one of the best district yield.
Speaker #2: And our fewer loss is only 8 percent. So all these efforts are being taken we have also a straight target where all the units are have been advised to achieve the quarter one in the Solomon study.
Speaker #2: So various factors will help the company to increase the gross refining margins. And the new units are also going to produce more value-added products.
Speaker #2: So all these things are going to definitely not increase our throughput. It will also result into better refining margins for the company.
Speaker #3: That's great. Thank you so much.
Speaker #1: Thank you. The next question is from the line of Sarthak Sita from DSP Asset Managers. Please go ahead.
Speaker #3: Hi. Thank you for the opportunity. Congratulations and team too, whether the difficult quarter. So my question just is on mainly on the ATF side.
Speaker #3: On the opening remarks, you mentioned that there has been some dip in demand in this quarter in terms of ATF is concerned. Just a couple of questions around that.
Speaker #3: So I want to understand how many airlines or which all airlines did avail the scheme that we had, the release by the government, where we were able to supply the fuel to at a fixed rate.
Speaker #3: So is there is that facility availed by airlines?
Speaker #2: No. See, I understood you're talking about the PSF facility, which was announced. That facility, no airlines had gone ahead to use that. Because by the time that facility got activated, the crisis started coming down.
Speaker #2: So that way, but again, the prices have started going up. We don't know what would be the future. I can't give any futuristic statements.
Speaker #2: But as far as we are concerned, we have remained fully engaged with the all the airlines. To support them. And as far as you know, as the international pricing is concerned, we were able to pass on the entire cost to the airlines.
Speaker #2: On the domestic front, we have had a negotiated pricing. And that is still continuing.
Speaker #1: Understood, sir. And one last follow-up, sir. On the website, we again see that the prices for March have been updated for ATF. So I'm assuming there would be multiple revisions post that.
Speaker #1: So any range of price that you can guide as to in last one month or last quarter where we supplied the ATF? And if at all, we can update that on the website?
Speaker #1: That would also be helpful, sir.
Speaker #2: See, we continuously update our websites. And because of this very geopolitical situation, situation is changing so fast that it was not always possible to keep updating and thing.
Speaker #2: But I can share one thing that domestic airlines are concerned. The domestic airlines are being today, if I talk about today, it is around 115 fleets per liter.
Speaker #2: Which we are supplying to the domestic scheduled airlines in the country.
Speaker #1: Okay. That is the price fixed in that scheme, right?
Speaker #2: No. Last time, last month, it was reduced now again today is a pricing cycle day. So again, it has been increased to 115 rupees per liter.
Speaker #2: Last cycle was 110 rupees per liter. Before that, also it was 115. So depending upon the movement in the international courts of ATF, we keep on adjusting our selling prices.
Speaker #2: To the scheduled domestic airlines. International pricing is typically going as per the MOPAC pricing.
Speaker #1: Market price, yeah. Fair. Got it, sir. That is from my side. Thank you. Thank you so much. Thank you. The next question is from the line of Kishan Mundra from Dam Capital.
Speaker #1: Please go ahead.
Speaker #4: Hi, sir. Thanks for taking my question. Two questions from my end. And apologies if you have already answered them because I joined in a bit late.
Speaker #4: So firstly, on the on all the refining capex and the pet chem expansions that we have done so far, if you could share the expected completion timelines and in that context, what is the total throughput that we are targeting for FY27 and 28?
Speaker #4: That would be my first question. And second question is you highlighted that petrochemicals is where you see a lot of demand. Coming from. So in that context, sir, what are the key projects that you are contemplating?
Speaker #4: So key products that you would be targeting and what is the scale of the petrochemical expansion that we are talking about?
Speaker #2: Okay. See, on the refining side, Pandipath refinery is being expanded from 15 MMTPA to 25 MMTPA. This project is roughly going to cost me somewhere around 38,000 crores.
Speaker #2: And the scheduled date of completion is December 26, almost this project is 94% complete as of date. As far as Gujarat refinery, expansion is concerned from 13.7 MMTPA to 18 MMTPA.
Speaker #2: The costing is somewhere around 19,000 crores. The project is almost 90% complete. And the scheduled date of completion, we expect is November 26. And the lonely refinery, which is being expanded from 6 MMTPA to 9 MMTPA, it is somewhere costing around 18,000 crores.
Speaker #2: It is almost 92% complete. And its scheduled date of completion is now December 26. So as far as the petrochemicals are concerned, our PXPTA contracts which is almost 95% complete is also expected to commission in next one month now.
Speaker #2: And the other plant, this is the Poly Butadine Rubber Plant at Panipath, which is costing me somewhere around 3,000 crores. It is also expected to get commissioned by December 26.
Speaker #2: So if I talk about these five projects, they are going to cost me somewhere around almost approximately 90,000 crores or dollar terms may I can say it's almost a 10 billion capex which is going to be commissioned by end of this calendar year.
Speaker #2: So and going forward, we have many projects which have been approved. That whether it is we have many projects whether it is on LAB, PXPTA, so all these projects will add another five MMTPA of my petrochemical intensity capacity.
Speaker #2: And all these projects are somewhere going to cost me 1 lakh crore as I have already shared with the earlier question. All these projects will start getting something has started some things are going to start.
Speaker #2: And we expect all these projects to be commissioned by 29, 30, March 30 as of date is the expected target. Maybe here and there five or six months.
Speaker #4: Okay, sir. And if you could share so no new refining capacity being considered and what would be your FY28 throughput target for refining?
Speaker #2: See, this year for although we our performance is much more than my installed capacity. So for 26, 27, my throughput is expected to be around 77 MMTPA.
Speaker #2: And 27, 28, it should turn 85. And in 28, 29, it should turn 90.
Speaker #4: Okay. Okay. Thank you, sir.
Speaker #1: Thank you. The next question is from the line of Bineet Banka from Namora Group. Please go ahead.
Speaker #3: Yeah. Hi, sir. Thanks for the opportunity. One question on ethanol blending. So are we flexible to reduce the blending percentage if your crude price falls to say $60?
Speaker #3: Because I think according to my numbers, below $65, ethanol will become a drag on your marketing economics. And this is despite no excise duty being charged on ethanol.
Speaker #2: I don't want to give any futuristic statements. In this on-call, but we are committed to achieve the target of drilling given announced given by the government for all the three oil companies put together.
Speaker #2: So this decisions are not taken on company-to-company basis of ethanol blending. It is taken together. And whatever targets would be given, today it is 20%.
Speaker #2: We have achieved 20%. And we are whatever new targets would be given, we would be able to achieve that. Very comfortably.
Speaker #3: Fair enough, sir. And secondly, on pet chem, intensity, I think you said intensity will go up from say 6% oil to 15% over the next five years.
Speaker #3: So is there any hurdle rate that we look at before making an investment in pet chem? Because according to my understanding, most of these NAFTA-based pet chem plants may have subpar economies given the pet chem cycle has been very weak over the last two, three years.
Speaker #3: So any hurdle rate that you are looking at?
Speaker #2: See, any investment which is as a part of the capital allocation policy all investments have to pass the hurdle rate in our system. So but it is on what basis you take the assumptions of the returns.
Speaker #2: See, if you see the refining margins, we started this refining extensions somewhere around four years back. And we today whatever refining extensions have happened or are going to happen are having extraordinary returns.
Speaker #2: Same is the case with pet chem. Today, we are hopeful that pet chem is a very cyclical business. And whatever is because the main thing is demand in the country.
Speaker #2: The demand is huge. Everything is getting imported. So at some scale, one or two good years in pet chem cycle, always you recover the entire cost from the business.
Speaker #2: So it is a pet chems are being done based on the my natural integration with my business. It is a part of my long-term strategy.
Speaker #2: And internal being the major company which can invest huge make huge investments, which other companies definitely we have an edge in this sector. And we are very hopeful that it will be we will be able to give good returns to our stakeholders as we have given in because of our refining business.
Speaker #3: Understood. One follow-up. All these pet chem capacity addition, will these be NAFTA-based or you will be also open to adding say E10-based tractors in the future?
Speaker #2: Well, we are very open to any type of input we are open. We are not only dependent upon NAFTA-based. We are open for the gas-based pet chem whether it's NAFTA.
Speaker #2: So any type of input we are open. And that will be the long-term strategy for the company also.
Speaker #3: Thank you, sir. Very helpful.
Speaker #1: Thank you. The next question is from the line of Yogesh Patil from Daulat Capital. Please go ahead. The current participant has left the queue.
Speaker #1: The next question is from the line of Vivekanand from Amit Capital. Please go ahead.
Speaker #3: Hello. Thank you for the follow-up opportunity. Two questions. The first one is on sourcing the crude sourcing again. How much are you sourcing now on long-term basis and how much is the spot proportion?
Speaker #3: And what is the pricing on the spot cargo versus long-term sourcing that you're doing? If you can again, Anuj, like you gave the three word to now context, if you can do that for this question, it would be great.
Speaker #3: The second one is any further update on project spring that you would like to share during the current quarter or anything that has changed because of the war that got prolonged in respect to milestones that you had set for project spring.
Speaker #3: Thank you.
Speaker #2: As far as the crude sourcing is concerned, before the war, we were doing almost 50% spot and 50% term. But because of the prevailing geopolitical situation, it keeps on changing.
Speaker #2: So if you talk about I can give you the average numbers for the quarter one, 26, 27. Our spot procurement went as high as 84% because most of the spot was coming from the Middle Eastern region.
Speaker #2: But so our spot volume jumped from 50% to almost 84%. And the situation is very, very dynamic. Something changes in the state of almost or in the Red Sea, things will change immediately.
Speaker #2: So it we keep track of the developments on day-to-day basis. And try to optimize our crude sourcing. Now, any other now coming to the second point, what you said was sprint target.
Speaker #2: See, sprint has as I said, sprint had a very positive impact on our company. Last year, we could save almost 2,000 crores in the one financial year itself.
Speaker #2: Now, on 1st of now, recently, we have announced sprint two, which will give another we are expecting another 2,000 to 2,500 crore savings over and above what we achieved last year.
Speaker #2: And sprint is not only on cost. It is on efficiency. It is on market share. It is on efficiency improvement. It is on the logistics savings.
Speaker #2: It is on the opex saving. So all put together, we expect that we can whatever we achieved last year of 2,000 crore savings and this week will be able to achieve this year as well.
Speaker #2: So this is on sprint. And they're not only one factor which is supporting us because we are keeping track of each and every opex, capex, and trying to optimize that.
Speaker #3: Right. Just a couple of follow-ups. So understand that you are now sourcing a lot more spot versus long-term, right? So does it mean that because you're getting spot cargoes from regions other than the Middle East, you would be getting some of these cargoes at a meaningful discount or even long-term long-term ones?
Speaker #2: See, other than Middle East, we are buying all spot basis. So the pricing will change on month-to-month basis. So for the but one thing is there, I think Indian Oil has managed to close the crude at a very, very optimum rate even at the peak of the hour.
Speaker #2: Yes, our crude cost went up, which I have already shared in my con call. But definitely, the first target is to make the crude available.
Speaker #2: And you all know that Russian crude availability also went up because of the many happenings in that site. And we immediately increased our procurement from Russia we increased almost up to 50%, 54%.
Speaker #2: And we also increased our procurement from South America. Site. Also Venezuela crude we increased. So all these factors have helped us to contain the crude cost for the company.
Speaker #2: But definitely, if you talk about pre-war and post-war, our crude cost has gone up. And that is if you see it's a common phenomena in the entire oil and gas sector.
Speaker #2: India.
Speaker #3: Right. Sure. My last one is on this new US sanction that is being referred to of Russian and Iranian hydrocarbons, right? The tariffs on that.
Speaker #3: So what is the communication you received from the government? Are you still sourcing Russian and Iranian crude or is that now subject to other waivers that the US needs to do?
Speaker #2: See, that is still not implemented actually. That is still one of the houses in the US's past. But I think it's still it is yet to be fully approved in the I don't have the exact names to which it gets approved.
Speaker #2: But definitely, it is still not fully implemented. And we are tracking the developments whether in US or any other market. And whenever it gets implemented, we will be able to mitigate that also.
Speaker #2: So my colleague has given me a paper which says US Senate has advanced and passed the bill in the Senate, but it has not yet become law.
Speaker #2: It must clear the US House of Representatives. And then be signed by the president before it gets implemented. So as of now, it is not implemented.
Speaker #3: Okay. All right. Thank you very much and all the very best.
Speaker #1: Thank you. Ladies and gentlemen, that was the last question of the day. I would now like to hand the conference over to the management for closing comments.
Speaker #3: Yes.
Speaker #2: Thank you all for your time and insightful question. On behalf of the entire Indian Oil team, I appreciate your continued trust, confidence, and support.
Speaker #2: We value our engagement and look forward to future interaction and keeping you updated on our progress. Thank you very much once again. Stay safe and take care.
Speaker #2: Thank you.
Speaker #1: Thank you. On behalf of Antec Stock Broking Limited, that concludes this conference. Thank you for joining us and you may now disconnect the lines.
