Bharat Petroleum Corporation Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Yogesh Patil - Dolat Capital Market Private Limited - Analyst : Thanks for taking my questions. My question is related to buffer account for the domestic LPG. Sir, you have reported a negative amount by the end of this quarter. And even in the current scenario, you are still losing some money on the sale of domestic LPG. Is there any clause related to buffer account that government will reimburse the under recovery if the buffer account remains negative for 6-months, 12-months, 9-months down the line. That's one thing. And again, we wanted to understand when government can give or consider this amount for the reimbursement? Any thoughts on this side.

Question: Yogesh Patil - Dolat Capital Market Private Limited - Analyst : Do you expect the upcoming budgetary report at July 23, any kind of support?

Question: Yogesh Patil - Dolat Capital Market Private Limited - Analyst : Okay. Sir, my second question was related to Russian crude. What was the share of Russian crude BPCL process during the quarter?

Question: Yogesh Patil - Dolat Capital Market Private Limited - Analyst : Okay. And one more thing regarding -- we also want to know directionally the discounts on the Russian crudes were lower compared to the previous quarter. And is that impacted on the GRM to some extent during the quarter?

Question: Yogesh Patil - Dolat Capital Market Private Limited - Analyst : We also read about the Andhra based new refining unit and petrochemical unit, which will be set up by the BPCL. Can you please elaborate on the same? And if possible, can you share some CapEx during the quarter? What was the CapEx during the quarter? And what is the guidance for FY25?

Question: Yogesh Patil - Dolat Capital Market Private Limited - Analyst : Okay. Sir, if possible, can you share the total consolidated debt by the end of quarter first and cash position?

Question: Yogesh Patil - Dolat Capital Market Private Limited - Analyst : Thanks a lot.

Question: Mayank Maheshwari - Morgan Stanley - Analyst : Thank you for doing the call. Two questions from my end. First was more on market share. I think especially on an overall basis, you have grown a bit slower this quarter compared to the industry growth. So can you just comment in terms of how you are trying to defend your position considering the impact of private player's demand competition that's coming through? Any things that you're seeing there that you can kind of help us out?

Question: Mayank Maheshwari - Morgan Stanley - Analyst : So you think your diesel market share comes back to you? Or do you think this will be a new normal that you kind of expect now?

Question: Mayank Maheshwari - Morgan Stanley - Analyst : And sir, the second question is more related to industrial products and margins there. Have you seen some impact on margins in the last quarter because of competition even on the industrial side?

Question: Mayank Maheshwari - Morgan Stanley - Analyst : Got it. Thank you.

Question: Sumeet Rohra - Smartsun Capital - Analyst : Thank you very much for doing this on a Saturday. Sir, my question more is on the LPG front, so as you mentioned that LPG is a controlled product by the Government of India. So, sir, can you first quantify is that -- what's the amount of LPG under recovery you have taken in this quarter? Is it INR2,900 crores. Am I right on that?

Question: Sumeet Rohra - Smartsun Capital - Analyst : Understand. But sir, now I mean, as a matter of fact, is that, see my question to you is more as an investor rather than anything else. So how do we look at it? Because since it is a controlled product, it's obviously going to be compensated to you as it's always been in the past. So assuming that it's done, so you would reverse it immediately in this quarter? I mean, is the understanding correct? Or would you...

Question: Sumeet Rohra - Smartsun Capital - Analyst : Okay. And sir, secondly, I mean, on the pricing point of view, is there -- I mean, the matter of fact is that now crude is very well in the range between $80 and $90 as you highlighted. But are there any thoughts on the pricing mechanism or something of that sort? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Sabri Hazarika - Emkay Global Financial Services Ltd. - Analyst : I have three questions. So first one is on this LPG losses only. So, I think, a couple of years back also you brought around INR22,000 crores that was like given as a onetime settlement. So who basically goes for this. Is it you or is it MOP&NG who goes to the Finance Ministry, what is the run up to this declaration of onetime compensation for loss in LPG?

Question: Sabri Hazarika - Emkay Global Financial Services Ltd. - Analyst : Is it now with the Finance Ministry this request? Or (multiple speakers)

Question: Sabri Hazarika - Emkay Global Financial Services Ltd. - Analyst : Okay. Secondly, marketing inventory gains have reported around INR400 crores. Can you give some color on -- I mean, last year there has been some price drop on this, so how has this come from?

Question: Sabri Hazarika - Emkay Global Financial Services Ltd. - Analyst : Okay. So it is more to do with RTP rather than retail pricing, is that right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Sabri Hazarika - Emkay Global Financial Services Ltd. - Analyst : So whenever there's an excise cut that also affects the RTP other than the (multiple speakers).

Question: Sabri Hazarika - Emkay Global Financial Services Ltd. - Analyst : And sir, last question, how many retail outlets you have added in Q1, you said 23,000 is the target for the year?

Question: Sabri Hazarika - Emkay Global Financial Services Ltd. - Analyst : Thank you so much.

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Thank you, sir, for this opportunity. In terms of sort of the additional refining capacity that we are looking at either of the two locations, you have previously stated that you like to grow the refining capacity to 45 million tonnes. So is this new refining within the 45 million-tonne capacity target? Or are we looking to extend the refining beyond that?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Understood. In terms of the NRL, when it gets expanded, we will still have the right to market NRL products as well, so that would still remain our capacity and it will not necessarily be a shortfall? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : And would this capacity be of the order of 10 million tonne odd? What would be the typical size that we will be looking here?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : Sure, sir. And on the E&P side, could you update us on the status on the Mozambique as well as the Brazil block?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst :

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : And in terms of the Mozambique, do we have idea about the cost escalations that may happen with this delay, project?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : And is there any way we can sort of maintain the IRR on this project or this will translate into (technical difficulty) deduction in the IRR value?

Question: Kirtan Mehta - BOB Capital Markets Ltd - Analyst : All the deals are on spot basis today, a bright spot basis.

Question: Maulik Patel - Equirus Securities Private Limited - Analyst : (technical difficulty).

Question: Maulik Patel - Equirus Securities Private Limited - Analyst : Yes, I'm using the handset only.

Question: Saket Kapoor - Kapoor Company - Analyst : Firstly, if you could articulate towards the reasons for lower cracks for the current quarter and post the exit of June, how are the cracks behaving for the month of July? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Saket Kapoor - Kapoor Company - Analyst : So post the June also, what are the current cracks, sir, for the gasoline and diesel currently?

Question: Saket Kapoor - Kapoor Company - Analyst : Okay. And what was the average for the June quarter?

Question: Saket Kapoor - Kapoor Company - Analyst : Sir, and on the CapEx front, sir, what have been allocated in terms of our E&P activity. And in terms of also the -- if you could give the number for the pipe segment, seamless pipes and all which are required in the drilling E&P activity, what are the outlined for the current year in terms of the casing pipes and the similar segment?

Question: Saket Kapoor - Kapoor Company - Analyst : Right. And lastly, on the lubricant part, sir, what is our current market share? And what was our volume for this quarter?

Question: Saket Kapoor - Kapoor Company - Analyst : We can look forward, sir, for investor presentations sir, I think so as I've not missed correctly there. We are coming up with our numbers, but press release and investor presentations do not form a part of our results. So can we look forward for these two also being a part and parcel along with the continuity of con call.

Question: Gagan Dixit - Elara Securities - Analyst : Sir, my question is regarding this new refinery plan. So what are the key criteria that you look for setting up the refinery? I mean, is something the demand that's the reason that you want to see? Or you want to see some advantage on the petrochemical side? Or -- what are the -- I mean, sir, the idea that you are evaluating, I mean, from this new refinery purpose?

Question: Gagan Dixit - Elara Securities - Analyst : And sir, what I know that -- I think a long back, you had some land already purchased 2 decades back I think in the Allahabad. So that land is still there if you want to set up a refinery might be possibly the locations?

Question: Gagan Dixit - Elara Securities - Analyst : Okay. So that can handle that 10 million tonne also refinery, if you want, I mean. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Gagan Dixit - Elara Securities - Analyst : Thank you.

Question: Sumeet Rohra - Smartsun Capital - Analyst : So I just wanted to get a sense of view on profitability because I'm just looking at this on a con call of nearly 1 hour we spend nearly 15 minutes on CapEX, which is actually a burden to our shareholders. So can you talk a bit on profitability? Because I understand that on this quarter, we have reported a profit of about INR3,000 crores after absorption of the LPG figure of INR2,300 crores plus we had a INR400 crore inventory gain. So technically, you reported about INR4,800 crores of profit in this quarter, which is absolutely astounding and good. So sir, I want to pick your brains on this. Is that -- so do you see this profit sustaining firstly? Secondly, sir, you have something called Project Aspire, wherein you are looking to double profitability as well. So can you please talk a little bit about your Project Aspire on profitability? And how do you see the next few years shaping up in terms of PAT, sir?

Question: Gagan Dixit - Elara Securities - Analyst : And sir, I have just one very humble suggestion being in the best interests of our company. So henceforth we can spend a bit of time on profitability as well because that will inspire and give confidence to our stakeholders of exactly where we are headed. So because it is very difficult to digress numbers on our company, which is selling so many products across so many verticals. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call So sir, if -- as we talk about CapEx, talking about profitability will also help in a big way, and it will actually restore confidence among the stakeholders. So that's something which came to mind so I just thought I'll bring it up to your attention, sir. And wish you very -- all the best. And I sincerely hope that you can deliver on this INR20,000 crores profit, which your company deserves. Thank you, sir.

Question: Vipulkumar Anopchand Shah - Sumangal Investment - Analyst : So my question is what is our cumulative investment till date in BPRL?

Question: Vipulkumar Anopchand Shah - Sumangal Investment - Analyst : [39]?

Question: Vipulkumar Anopchand Shah - Sumangal Investment - Analyst : Okay. And sir, one small suggestion if you can make hand out an investor presentation as part of your results, it will be very helpful, sir.

Question: Somaiah V - Avendus Spark - Analyst : Sir, on the Bina expansion, can you just help us out on the time line or in terms of milestones, what we are looking in the next two, three years? And also for the current year CapEx, what you mentioned for refining, how much is that going towards Bina? And Also next one or two years, how we plan to spend on the CapEx progress for this product? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Somaiah V - Avendus Spark - Analyst : Got it, sir. So at the company level, what would be your CapEx run rate. So this year, you mentioned INR16,500. So taking Bina's expansion requirements. So how it will be in year three, what will be your run rate CapEx?

Question: Somaiah V - Avendus Spark - Analyst : Okay sir. Also this year, you mentioned INR7,100 crores CapEx for marketing. I mean, in terms of station additions, can you give some granularity in terms of how do you see?

Question: Somaiah V - Avendus Spark - Analyst : Got it, sir. Sir, on the refining front, in terms of Russian crude sourcing, so this 39%. So this is the max that we can take-up for our refineries or there is still some headroom in terms of increase?

Question: Somaiah V - Avendus Spark - Analyst : Also in terms of Middle East crude sourcing premiums or discounts, I mean, how has your direction been in the last few months? Any thoughts on that?

Question: Somaiah V - Avendus Spark - Analyst : Sir, any impact in the recent times because of the freight cost kind of going up, any impact to us in terms of either sourcing cost?

Question: Somaiah V - Avendus Spark - Analyst : Got it. Thank you.

Question: Saket Kapoor - Kapoor Company - Analyst : Sir, for the ethanol blending project, what have we outlined for the current financial year in terms of the procurement exercise. And also there have been talks about laying of separate pipelines for transportation of the same or setting up to reduce the transportation cost for ethanol. So if you could give some update on the same, sir, what is our current year target?

Question: Saket Kapoor - Kapoor Company - Analyst : Sir, in terms of crude liters can you mention what have -- how much have we ordered and what have been our procurement for the first quarter? And what would be for the full year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Saket Kapoor - Kapoor Company - Analyst : Sir, two questions are pending. For the lubricant part, you shared you will be sharing separately and now for ethanol also you want to share it separately. So separately, sir, how will you share if you could just elaborate.

Question: Saket Kapoor - Kapoor Company - Analyst : Okay. But our emails are not registered with you, sir, how will you know. Sir, I think these questions can be answered in the form of a release or submission to our website or through exchanges so that it could benefit investors at large and not pertaining to one or two specific investors.

Question: Saket Kapoor - Kapoor Company - Analyst : Come again, sir?

Question: Saket Kapoor - Kapoor Company - Analyst : Through Antique Global. So we have to get in touch with them, sir. And lastly, on the procurement part, sir, in terms of crude liters you can give an idea last year how much we have procured and for the first quarter numbers. So you have the numbers with you?

Question: Saket Kapoor - Kapoor Company - Analyst : And for the profitability part, sir, as one of the investor mentioned. So if you normalize the quarter as a whole, the PBT number for this quarter is INR4,800 crores has been confirmed by the management team? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 20, 2024 / 5:30AM, BPCL.NS - Q1 2025 Bharat Petroleum Corporation Ltd Earnings Call

Question: Saket Kapoor - Kapoor Company - Analyst : And what would be the comparable number, sir?

Question: Saket Kapoor - Kapoor Company - Analyst : Comparable number Q-on-Q and also last year, sir, if we take the similar parameters, what should be the June '23 comparable numbers look like if we compare like-to-like basis?Comparable number Q-on-Q and also last year, sir, if we take the similar parameters, what should be the June '23

Question: Saket Kapoor - Kapoor Company - Analyst : If you could just summarize the questions and the unanswered part of during the call and if that could be just worked out for the coming quarters, that would be very, very helpful for investors and the analysts so that we can get the information right during the call. So I hope the team will be better prepared to look at it.

Question: Vikash Jain - CLSA - Analyst : Just one question. Why are we adjusting the LPG under recovery because that is not anyways part of the income statement since we are using normalized margins to get to our reported profit, right? That's part of the buffer. So if anything, if we take the losses then, in fact, the reported and go to the old accounting where losses were part of the base income statement, then profits will be lower by that INR2,800 crores or whatever number, right?

Question: Vikash Jain - CLSA - Analyst : What I'm not able to understand when you say you have created a buffer account. So has that loss become part of your marketing profits as you have reported? Or that is something which is created beyond -- it's not part of the income statement right now because your profits are being calculated at the normal level of LPG margins and that has been kept out of income statement as a receivable, which you will take, right?

Question: Vikash Jain - CLSA - Analyst : Understood. Thank you so much and thank you.

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : Just one simple question. The sequential change of around INR750 crores to INR800 crores of oil bonds. What was that on account of. Can you explain that?

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : Okay. Sorry, this is to have overnight borrowings, you have to...

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : Okay. So these were issued by the government fresh? Or were you purchasing?

Question: Vivekanand Subbaraman - Ambit Private Limited - Analyst : Okay. Understood. Okay. It's like treasury?

Question: Varatharajan Sivasankaran - Antique Stock Broking Ltd - Analyst : Thank you, Michelle. I wish to thank all the participants and the management of BPCL for taking time out to join this call and discuss all the issues. Thanks, everyone. Have a nice day. Thank you.