Q1 2027 Indian Oil Corp Ltd Earnings Call
Speaker #1: Corporation. We have with us Mr. Anujin, Director of Finance, Mr. Nitin Kumar, ED Corporate Finance and Treasury, Mr. Pramod Jain, CGM Treasury. Without much ado, I would like to hand over the floor to Mr. Anujin for his opening remarks.
Speaker #2: thank you, Mr. Mudurajan. 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 shown 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 Indanoil has once again demonstrated these strengths by ensuring uninterrupted energy supplies across the country with reliability and resilience. Indanoil continues importing secure, reliable economically competitive crude oil grades from diverse countries while managing challenges of high market volatility logistic 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% against 50% 51% in the last year. As regards our operational performance for Q1 financial 26-27, we reported a net loss of rupees 2661 crore compared with the profit after tax of 11378 crore in the preceding quarter that is quarter 4 of financial year 25-26 and profit after tax of 5689 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 rupees 275972 crore against rupees 232855 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 rupees 218608 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. Dear 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.
Speaker #3: And are subject to uncertainties that could cause actual results performance or achievements to differ materially. 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 US Federal Reserve has held its benchmark rate in the range of 3.5 to 3.75% 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% maintaining a neutral stance even as it flagged upside risk to inflation from elevated crude prices and and global geopolitical tensions.
Speaker #3: Taken together, these signals a continued higher yield environment for the foreseeable near term. Coming to the forex market, the rupee remained volatile during Q1 of this year depreciating to a quarterly low of about 96.83 per USD in in mid-May on US-Iran escalations and the state of our news closure before recovering to around 94.67.
Speaker #3: Aided by RBI's measure and US-Iran ceasefire announcements, rupee is currently trading in the range of 9596 per USD and continues to remain under pressure driven developments.
Speaker #3: As for PPSC report, MSNHC consumption grew a healthy 7.5% sequentially over the previous quarter reaffirming the resilience of India's mobility and industrial demand even on a even amidst calibrated pricing adjustment in response to volatile global markets.
Speaker #3: ATM volumes however contracted by around 5% reflecting suspended international routes following recent air airspace closures and softer air travel on the back of higher fare fares.
Speaker #3: LPG volumes declined by roughly 20% 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 remain uneven.
Speaker #3: The progress of the monsoon will remain an an important variable for rural demand agriculture output and and 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 dollar a barrel from 83.01 dollar a barrel in the immediately preceding quarter that is Q4 of 25-26 which tantamounts to increase of about 21%.
Speaker #3: Due to ongoing US-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% in comparison to throughput of 19.7 MMT and capsule utilization of 113.9% during the preceding quarter.
Speaker #3: For Q1 25-26 the throughput was at 18.7 MMT with capsule escalation of 106.7%. Our refineries have achieved lowest ever quarterly fuel and loss of 8.04% 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% with a weak 27.7 million metric ton during the preceding quarter with capsule utilization of 78.3%.
Speaker #3: During the corresponding quarter of 28 of 25-26 the capsule utilization was about 73.5% 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 a 10 kg composite LPG cylinder offering with express 4-hour home delivery.
Speaker #3: Simultaneously the popular 5 kg Indian Chotu 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 Coimtoor the offering will 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 1873 TMT which includes CGT sales of 67 TMT as compared to total gas sales of 1814 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 UP NEDA 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 by ethanol biodiesel biogas biogas and sustainable aviation fuel the corporation continues to scale commercial capacity and deepen its 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 32700 crores.
Speaker #3: These invest 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 Parit at advanced stage of execution and are at and are targeted for completion during 26-27.
Speaker #3: Phase-wise commissioning of process utilities offsite facilities are being undertaken in a structured manner to enable progressive capacity buildup and integration. So far as Panipat refinery 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 30th of June 26 was at 141453 crore level compared to 110668 crore as on 31st March 26.
Speaker #3: The increase in the borrowing was mainly on account of higher working capital requirements. As of 30th of June 2026 the company's gross debt equity ratios to debt 0.71 reflecting a comfortable leverage profile after adjusting for financial investments the net debt to equity ratio further strengthens to 0.51 positioning us well to pursue growth opportunities absorb market volatility and maintain financial strength across cycles.
Speaker #3: With with with these words I take a pause here and request the actor finance for his further remarks.
Speaker #1: Thank you Vijay. 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 evolves 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 #1: We will continue to pursue growth and with discipline resilience and with long-term perspective creating sustainable value for all our stakeholders. With that I will end my briefing here we would now be happy to take your questions.
Speaker #1: Thank you.
Speaker #2: 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 #2: 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 #2: Ladies and gentlemen we'll wait for a moment while the question queue assembles. The first question is from the line of Probil Sain from ICICI Securities.
Speaker #2: Please go ahead.
Speaker #1: Thank you for the opportunity sir and congratulations for a resilient performance it's been a very challenging quarter. My first question is actually a slightly broader one from a capex standpoint.
Speaker #1: The presentation shared earlier with 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 #1: 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 #1: That's my first question.
Speaker #3: Yeah thank you. As we have known that we normally do a capex between 30000 crore to 40000 crores in a year. And our major expansion are getting over in this year itself.
Speaker #3: 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 #3: Estimated capex on the same would be around rupees 1 lakh crore over next five to six years. All these projects are in the various stages of approval.
Speaker #3: So we are but as a thumb rule various projects are under discussion whether it's a renewables whether it is a pet chem biofuel or we are also you have seen shipping we are trying to acquire few ships.
Speaker #3: So all these put together our capex should be between 30000 years also.
Speaker #1: Got it sir. That's pretty useful. The second question was more about from a you know in this quarter the GRM that you have mentioned which is net of SAEB if the SAEB or export taxes not there just as a hypothetical what would a normalized GRM have looked like?
Speaker #1: If we can quantify the SAEB impact on a per barrel basis.
Speaker #3: See you know our reported GRM is 15.59 dollar per barrel.
Speaker #1: Right.
Speaker #3: And see GRMs depend upon many factors but to be very specific if you add SAEB it would be around 36 dollars per calculation.
Speaker #1: That would have been the gross number if we were to include SAEB.
Speaker #3: Yes yes 36 dollars.
Speaker #1: Got it sir. One last question if I may sir the how much has LPG loss per cylinder reduced in the current quarter and what was it per cylinder for us in one queue?
Speaker #3: See as you you see that I will give you the month wise data 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 but it was around 475 rupees per cylinder.
Speaker #3: 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 #3: And now in the now it is Saudi ECP has again gone up from 592 to 632.
Speaker #1: Okay.
Speaker #3: 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 are anticipating.
Speaker #3: Yeah that would be average in Q2 assuming that the same Saudi ECP continues for the next month as well.
Speaker #1: Understood.
Speaker #3: 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.
Speaker #3: 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 swing upward trend.
Speaker #1: Right right. No no of course sir. That is that is obviously there. Appreciate that. Appreciate that. Thank you.
Speaker #2: 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 #2: The next question is from the line of Sabri Hazrika from MK Global. Please go ahead.
Speaker #4: 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 #3: See yes there was a invent inventory impact on GRMs and there was a 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 #3: It was a loss.
Speaker #4: Okay.
Speaker #3: And in case of finished goods we had a gain so that also helped us to mitigate our losses. For this quarter.
Speaker #4: Okay so so finished good gains could be like around six seven thousand crore I'm just making an upcut guess based on some of your peers.
Speaker #3: 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 15000 crores.
Speaker #4: 15000 crores for the quarter.
Speaker #3: Yeah.
Speaker #4: Okay sir fair enough. And this was mostly for all the products right petrol diesel LPG everywhere there were price price increase.
Speaker #3: 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 you know the pricing you know.
Speaker #4: Okay. Fair enough. And sir secondly on your project so 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 #4: 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 #4: So when that is expected to add to earnings?
Speaker #3: 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 and as you all the time the crude the refining throughput will come in series next year definitely it will have a our crude projection is definitely on a higher side.
Speaker #3: So we expect in 27 28 my throughput should be somewhere on 85 MMTPA.
Speaker #4: Right. And any GRM acquisition?
Speaker #3: GRM you see GRM has nothing to do with GRM will all depend upon the play between the crude oil prices and the product prices and international market.
Speaker #3: So we we cannot predict what would be the GRM next year.
Speaker #4: Okay sir. Fair enough. Thank you so much.
Speaker #3: Yeah.
Speaker #2: Thank you. The next question is from the line of Nitin Tiwari from Philip Capital India. Please go ahead.
Speaker #1: 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 I mean would it be possible for us to improve our yield over 80 percent that we usually have from our refinery?
Speaker #3: See you already know that this is one of the best performance district yield and our losses are also minimum and we continue we continue to improve it and with the new modern expansion happening we definitely expect that our GRMs should improve.
Speaker #1: 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 percent?
Speaker #3: 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 #1: 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 #1: 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 are we making I mean losses in these products again and and like you know are we considering any price revisions if you can like you know comment on that and how do we go about understanding your your pricing action if if we have to go in there?
Speaker #3: See as far as 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 #3: 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 and based on the past experience also we have seen that government has fully extended support to PSU OMCs.
Speaker #3: Therefore on LPG based on the past practice we are confident that suitable compensation for LPG under recovery will be considered. Yes there would be uncertainty in the timing of compensation and the quantum but we are definitely sure that on LPG part we are we are going to get support.
Speaker #3: As far as the other products are concerned the situation remains very dynamic and 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 #3: So all these factors would be considered and appropriate decision will be taken.
Speaker #1: Sure sir. Sir lastly if I may like you just continue on the pricing question. So what was the increase in the commercial diesel price that we are taking?
Speaker #1: 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 and also what is the portion of commercial diesel sales in our overall diesel sales?
Speaker #3: 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 #1: Okay.
Speaker #3: 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 #3: So it would not so but I would gladly say that even today the prices have got modified. So of course for these things the product prices move on as per the.
Speaker #1: Any any indicate any indicative number in rupees per liter that you can tell us which we are charging for commercial consumption?
Speaker #3: See our issue 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 peak these prices would be moving as per the international prices.
Speaker #1: All right sir. Understood. Understood sir. Thanks so much sir for answering my question. I'll get back in the queue.
Speaker #3: If you want to have a specific data my team would be happy to give you after this phone call what have been the consumer prices in the past three to four months.
Speaker #1: Great sir. That would be really helpful. Thanks so much for answering my question sir. I really appreciate it.
Speaker #2: 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 Vivek Anand from Ambit Capital.
Speaker #2: Please go ahead.
Speaker #3: 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 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 how much of a premium or discount on on the brand were you getting crude landed in India versus how it is now and has there been any change in trend in in the last month also that that would be great if you can help us with that.
Speaker #3: That's my first question. The second one is on on the supply chain what 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 #3: I understand that there is some JV between the I mean MOU between the MOPMG and Ministry of Shipping. Is there any progress there? If you can talk about this topic thank you very much.
Speaker #1: Okay.
Speaker #3: 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 #3: So roughly I can tell you because it keeps on changing on each transaction what we are doing. Pre war generally IOC was buying bent minus one or two dollars in the market.
Speaker #3: But since the war has started the the you all know that the crude oil prices went very high. So we had a procurement cost of around ten dollars per barrel over brent.
Speaker #3: During the peak of the war it it keeps on changing. So overall impact I would say it was somewhere around ten dollars if you see.
Speaker #3: So now but in the month of July again it came down to two to three dollars per barrel. And again it is going up.
Speaker #3: So it is moving on Fortnite to Fortnite with a day to day basis. But yes on a overall summary you can say there was a impact of ten dollars per barrel on the peak of the war situation.
Speaker #3: 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 #3: 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 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 we have increased our procurement from West Africa Russian Venezuela even USA few cargoes came so it was a very diversified procurement strategy which helps a company like Indian Oil.
Speaker #3: To the now coming to your third question regarding the what is the status of the JV MOU between MOPMG and shipping. Yes that is also one of our strategy with even started before the war started.
Speaker #3: We wanted to have a shipping permit security as well. So I would say under the aegis of MOPMG and MO Minister of Shipping 19th on 19th September a non binding MOU was signed in this the Indian Oil shall be exploring 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 #3: So it this working is going on. Tenders are already out. So we are just seeing how much we can have a permit security by way of this joint venture company.
Speaker #1: Thanks so much for the detailed answers. Just one follow up on the first question. So the ten dollar overall impact that you mentioned this is versus the brent crude and secondly does it include shipping and logistics costs or is it.
Speaker #3: All inclusive. It is all inclusive. All inclusive.
Speaker #1: Are there.
Speaker #1: Okay. Okay. And this for the overall portfolio right. Not.
Speaker #3: It is not for the overall portfolio yes.
Speaker #1: Okay. Okay. Thank you very much.
Speaker #3: Yes.
Speaker #2: Thank you. The next question is from the line of Keshav Sohni from Kotak Bank. Please go ahead.
Speaker #1: 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 #3: As per the government of India policy Indian Oil has achieved twenty percent target of ethanol blending. So this is in at par with the other oil marketing companies.
Speaker #3: 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 #3: On a basket basis it is blended with the MS and the it is sold to the customers.
Speaker #1: 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 seventy five thousand crores in this quarter.
Speaker #1: But the reported number of all the three OMCs including IOCL are significantly better. So any specific reason for that?
Speaker #3: See there were many factors which helped us. First of all excise duty was reduced. The prices were increased in 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 #3: So practically we could the impact of June was not that much what we observed in the initial month. And in all you would have seen the Concor all the oil companies had positive inventory gains.
Speaker #3: So all these factors put together helped us to mitigate this situation.
Speaker #1: Okay. Okay. Thanks. Thanks for the detailed answer.
Speaker #2: Thank you. The next question is from the line of Sanjay Mogam from JP Morgan. Please go ahead.
Speaker #1: Thank you. Thank you. Good afternoon sir. I just wanted to follow up on the comment question from the earlier participant. On the sixteenth of June sir media reports suggested the oil secretary saying the OMCs are hitting borrowing limits sir.
Speaker #1: 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 #1: How do I reconcile the comment from the oil secretary on the sixteenth of June versus what has been reported sir?
Speaker #3: So see if you see my borrowings have gone up. If you see on thirty first March my borrowings were one hundred ten thousand crores.
Speaker #3: And on thirtieth of June it has gone to one hundred forty one thousand crores. So there was a significant jump within this three months itself if you see.
Speaker #3: But nonetheless I would say my debt equity ratio still because we had an extra we had a very good of financial year twenty five twenty six so my debt equity ratio still even after this increase my debt equity ratio still remains point seven.
Speaker #3: So but if you see on the absolute numbers my borrowings have gone up significantly by thirty one thousand crores in one quarter itself. But because of the you know because this is not the first time oil sector companies have seen this type of borrowing levels we have a banking arrangements to take the money from the banks at a very competitive rates and to manage the situation.
Speaker #3: But the situation remains a very very you know strong in one quarter if the borrowing goes up by thirty one thousand crores.
Speaker #1: No sir. I was just you know 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 #3: So what I I I have not seen that statement. Probably what he would be saying because everybody want see money is always available in the market.
Speaker #3: The issue is of 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 #3: Definitely if you have a if you go to the market with thirty one thousand crores borrowing in one quarter your cost will go up.
Speaker #3: Some each company will have its own profile. 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 #1: No sir. If I may follow up on a second sort of clarification. Historically when we have seen that crude falls through a quarter so this quarter the opening crude and closing crude is way different.
Speaker #1: 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 #1: 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 #3: No you have to compare the crude prices on thirty first of March and whatever after the ASU impacts everything on thirtieth June. Two thousand twenty six.
Speaker #3: So on overall basis this quarter if you talk about on thirty first of March my inventory was somewhere around eighty seven dollars per barrel.
Speaker #3: And on thirtieth June it is somewhere around eighty three. So I had an inventory loss on crude this time. And as I said in the first question itself on invent on the finished goods side I have an inventory gain.
Speaker #3: Because the 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 #1: Sorry sir. You said you marked your crude on June thirtieth at eighty three is it?
Speaker #3: Yes.
Speaker #1: Bloomberg it says seventy dollars. That's why the confusion sir.
Speaker #3: No I don't know about Bloomberg what they said.
Speaker #1: Right. All right. Thank you very much.
Speaker #2: Thank you. The next question is from the line of Saurabh Handa from Citi Group. Please go ahead.
Speaker #1: 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 #1: And one of your OMC peers is also talking about you know being a little bit more prudent on CAPEX and bringing up down their CAPEX intensity you know given some of the balance sheet issues.
Speaker #1: Could you comment on that? I mean you're you are still looking at thirty to forty thousand 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 #3: See if you see Indian Oil today has an energy basket share of around nine to ten 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 #3: 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 now our as I said in the beginning we are focusing on pet chem now.
Speaker #3: There's a huge demand of petrochemicals in the country. So the next cycle of petrochemicals will be done. But we don't have as such a targeted CAPEX that we have to spend this much.
Speaker #3: Somebody asked me I said in the past we have done that. So that can be but everything would be subject to proper returns. Proper you know proper due diligence.
Speaker #3: There's no as such targeted given to any one of us. 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 #3: We have a target of eighteen gigawatt renewable power in next three to four years. We have hundred percent owned subsidiary company Terra Clean. Where we have putting a lot of efforts to start our renewables.
Speaker #3: Already four to five gigawatt working is going on at various stages. And so renewables will start going up. And pet chem. These are the two sectors which will take my major CAPEX in the next three to four years.
Speaker #3: 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 #3: So they 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 #3: 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 in our company.
Speaker #1: Thank you sir. Just to follow up on this two questions. One in terms of you know India's energy you know dependence and there has been talk of some focus from the government on you know maybe investing in strategic reserves.
Speaker #1: And one of your upstream counterparts is setting up an SPR facility. Is there any such directive from the government to you or the OMC?
Speaker #1: Say on I don't know LPG storage facilities or any such things?
Speaker #3: See I I would give you a small just snapshot part of SPR. See today the existing capacity is around five point five point three three MMTP.
Speaker #3: It is at Visakhapatnam Mangalore and Pudur in Karnataka. Okay. And there's a target to increase it to eleven point eight three. This target is not for Indian Oil.
Speaker #3: It is for general indicated target for the entire oil and gas sector. In the geopolitics. So we are also under discussion to see whether we can also participate in this strategic storage.
Speaker #3: But as such there's no target or any straightforward given to us. All these proposals are being evaluated on a commercial consideration. And if we find that it it is commercially viable we will definitely be participating in SPRs as well.
Speaker #1: 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 #1: 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 etcetera.
Speaker #3: 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 our district yield is going up.
Speaker #3: 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 and our fewer loss is only eight percent.
Speaker #3: 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 quartile one in the in the Solomon study.
Speaker #3: 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 #3: So all these things are going to definitely not increase our throughput. It will also result into better refining margins for the company.
Speaker #1: That's great. Thank you so much.
Speaker #2: Thank you. The next question is from the line of Sarthak Seetha from DSP Asset Managers. Please go ahead.
Speaker #1: Hi. Thank you for the opportunity. Congratulations sir. And team too. Whether the difficult quarter. I so my question just is on mainly on the ATF side.
Speaker #1: 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 #1: 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 you know able to supply the fuel to at a fixed rate.
Speaker #1: So is there is that facility availed by airlines?
Speaker #3: No. See I understand you are talking about the PSF facility which was announced. That that facility no airlines had gone ahead to use that.
Speaker #3: Because by the time that facility got activated the the crisis started coming down. So that way that but again the crisis have started going up.
Speaker #3: So we don't know what would be the future. I can't give any futuristic statements. But as far as we are concerned we have remained fully engaged with the all the airlines.
Speaker #3: 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 #3: On the domestic front we have had a negotiated pricing. And that is still continuing.
Speaker #2: 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 have there would be multiple revisions post that date.
Speaker #2: So any 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 that would also be helpful sir.
Speaker #3: 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 you know keep updating and thing.
Speaker #3: 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 hundred and one one five fees per liter.
Speaker #3: Which we are supplying to the domestic scheduled airlines in the country.
Speaker #2: Okay. That is the price the fixed which in that scheme right?
Speaker #3: No last time last month it was reduced now again today is a pricing cycle day. So again it has been increased to one one five fees per liter.
Speaker #3: Last cycle was hundred and ten fees per liter. Before that also it was one one five. So depending upon the movement in the international courts of ATF we keep on adjusting our selling prices.
Speaker #3: To the scheduled domestic airlines. International pricing is typically going as per the MOPAC pricing.
Speaker #2: 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 #2: 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 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 use is where you see a lot of demand. Coming from.
Speaker #4: So in that context sir what are the key projects that you are contemplating so key products that you would be targeting and and what is the scale of of of the petrochemical expansion that we are talking about.
Speaker #3: Okay. See on the refining side Thanipath refinery is being expanded from fifteen MMTPA to twenty five MMTPA. This project is roughly going to cost me somewhere around thirty eight thousand crores.
Speaker #3: And the scheduled date of completion is December 26th. Almost this project is ninety four percent complete as of date. As far as Gujarat refinery expansion is concerned from thirteen point seven MMTPA to eighteen MMTPA.
Speaker #3: The costing is somewhere around nineteen thousand crores. The project is almost ninety percent complete. And the scheduled date of completion we expect is November 26th.
Speaker #3: And the lonely refinery which is being expanded from six MMTPA to nine MMTPA. It is somewhere costing around eighteen thousand crores. It is almost ninety two percent complete.
Speaker #3: And the scheduled date of completion is now December 26th. So as far as the petrochemicals are concerned our PXPTA contracts which is almost ninety five percent complete is also expected to commission in next one one month now.
Speaker #3: And the other plant this is the Polybutadine rubber plant at Thanipath. Which is costing me somewhere around three thousand crores. It is also expected to get commissioned by December 26th.
Speaker #3: So if I talk about these five projects they are going to cost me somewhere around almost approximately ninety thousand crores. Or dollar terms may I can say it's almost a ten billion capex which is going to be commissioned by end of this calendar year.
Speaker #3: 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 KT five MMTPA of my petrochemical intensity capacity.
Speaker #3: And all these projects are somewhere going to cost me one lakh crore as I've already shared with the earlier question. All these projects will start getting you know start some some but something has started some things are going to start.
Speaker #3: And we expect all these projects to be commissioned by twenty nine thirty March thirty as of date is the expected target. Maybe here and there five or six months.
Speaker #4: Oh okay sir. And if you could share so no new refining capacity being considered and and what would be your FY28 throughput target for refining?
Speaker #3: See this year for although we our performance is much more than my installed capacity. So for twenty six twenty seven my throughput is expected to be around seventy seven MMTPA.
Speaker #3: And twenty seven twenty eight it should turn eighty five. And in twenty eight twenty nine it should turn ninety.
Speaker #4: Okay. Okay. Thank you sir.
Speaker #2: Thank you. The next question is from the line of Bineet Banka from Nemora Group. Please go ahead.
Speaker #5: 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 sixty dollars?
Speaker #5: Because I think according to my numbers below sixty five dollars ethanol will become a drag on on your marketing economics. And and this is despite no excise duty being charged on ethanol.
Speaker #3: I don't want to give any futuristic statements. In this phone call. But we are committed to achieve the target of blending given announced given by the government.
Speaker #3: For all the three oil companies put together. So this decisions are not taken on company to company basis of ethanol blending. It is taken together.
Speaker #3: And whatever targets would be given today it is twenty percent we have achieved twenty percent. And we are we are whatever new targets would be given we would be able to achieve that.
Speaker #3: Very comfortably.
Speaker #5: Fair enough sir. And secondly on pet chem intensity I think you said intensity will go up from say six percent or to fifteen percent over the next five years.
Speaker #5: So is there any huddle rate that we look at before making an investment in pet chem? Because according to my understanding most of these NAFTA based pet chem plant may have subpar economies given the pet chem cycle has been very weak over the last two three years.
Speaker #5: So any any huddle rate that you are looking at?
Speaker #3: See any investment which is as a part of the capital allocation policy all investments have to pass the huddle rate in our system. So but it is on what basis you take the assumptions of the returns.
Speaker #3: See if you see the refining margins we started this refining expansions somewhere around four years back. And we today whatever refining expansions have happened or are going to happen are having extraordinary returns.
Speaker #3: 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 #3: 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 #3: 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 #3: And internal being the major company which can invest huge make huge investments. Which other with other companies definitely we have an edge in this sector.
Speaker #3: And we are very hopeful that able to give good returns to our stakeholders as we have given in because of our refining business.
Speaker #5: Understood. One follow up. All these pet chem capacity addition will these be NAFTA based or you'll be also open to adding say E10 based tractors in the future?
Speaker #3: Oh 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 petrochem pet chem whether it's NAFTA.
Speaker #3: So any type of input we are open. And that will be the long term strategy for the company also.
Speaker #5: Thank you sir. Very helpful.
Speaker #2: Thank you. The next question is from the line of Yogesh Patel from Daulat Capital. Please go ahead. The current participant has left the queue.
Speaker #2: The next question is from the line of Vivek Anand from Ambit Capital. Please go ahead.
Speaker #6: 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 #6: And what is the pricing on the spot cargo versus long term sourcing that you are doing? If you can again Anuj like you gave the pre war to now context if you can do that for this question it would be great.
Speaker #6: 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 #6: Thank you.
Speaker #3: As far as the crude sourcing is concerned before the war we were doing almost fifty percent spot and fifty percent term. But because of the prevailing geopolitical situation it keeps on changing.
Speaker #3: So if you talk about I can give you the average numbers for the quarter one twenty six twenty seven. Our spot procurement went as high as eighty four percent because most of the spot was coming from the Middle Eastern region.
Speaker #3: But so our spot volume jumped from fifty percent to almost eighty four percent. And the situation is very very you know dynamic. Something changes in the state of almost or in the Red Sea things will change immediately.
Speaker #3: 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 spring target.
Speaker #3: See spring has as I said spring had a very positive impact on our company. Last year we could save almost two thousand crores in the one financial year itself.
Speaker #3: Now on first of now recently we have announced spring two which will give another we are expecting another two thousand to two thousand five hundred crores saving over and above what we achieved last year.
Speaker #3: And it and spring 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 #3: It is on the opex saving. So all put together we expect that we can whatever we achieved last year of two thousand crores savings.
Speaker #3: And this week we'll be able to achieve this year as well. So this is on sprint. And they are not only one factor which is supporting us because we are keeping track of each and every opex capex and optimal trying to optimize that.
Speaker #6: Right. Just a couple of follow ups. So I understand that you are now sourcing a lot more spot versus long term right. So does does it mean that because you are getting spot cargoes from regions other than the Middle East you you would be getting some of these cargoes at a meaningful discount or even long term long term ones?
Speaker #3: See other than Middle East we are buying all spot basis. So the pricing will change on month to month basis. So for the what one thing is Oil has managed to source the crude at a very very optimum rate even at the peak of the hour.
Speaker #3: 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 #3: 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 fifty percent fifty four percent.
Speaker #3: 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 #3: 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 it's a common phenomena in the entire oil and gas sector.
Speaker #3: India.
Speaker #6: Right. Sure. My last one is on this new US sanction that has been referred to of Russian and Iranian hydrocarbon right. The tariffs on that.
Speaker #6: So what is the communication you have received from the government? Are you still sourcing Russian and Iranian crude or is that is that now subject to other waivers that the US needs to do?
Speaker #3: See that is still not implemented actually. That is still one act one of the houses in the US has passed. 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 #3: 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 #3: 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 a law.
Speaker #3: 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 #6: Okay. All right. Thank you very much and all the very best.
Speaker #3: Yeah.
Speaker #6: Thank you.
Speaker #7: 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 #6: Yes.
Speaker #3: 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 #3: We value our engagement and look forward to future interactions. And keeping you updated on our progress. Thank you very much once again. Stay safe and take care.
Speaker #3: Thank you.
Speaker #7: 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.
