Bharat Petroleum Corporation Ltd Q3 2022 Earnings Call Transcript

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

Question: Amit Rustagi - UBS Investment Bank, Research Division - Analyst : Congratulations for posting these wonderful set of numbers. Sir, my first question relates to your CapEx program. So when we are moving towards the green energy initiatives, what is the kind of IRR we are targeting on these projects? And in the past 2 years, we have seen that we have refrained from announcing big projects because we were under privatization. But now suddenly, we are seeing a flurry of projects from BPCL. So do you think that the privatization process may not go through, and so we have initiatives on the project side now? Vetsa Ramakrishna Gupta - Bharat Petroleum Corporation Limited - Director of Finance, Head of Corporate Treasury & Director Let me answer the second question first. So in terms of privatization, as earlier also we have clarified, we don't have any role in the entire process. Our role is submitting the information and open -- further open information for the due diligence. Come to the second in terms of the projects, as a business, on a going constant basis, where you take up the project and when we are transitioning -- happening from fuel to nonfuel, we should not delay any of the projects. And the second thing is that we have larger ambitions in terms of future growth and sectors of the organization. That was the reason we are exploring various projects like petrochemical, nonfuel retailing and including the renewables. And the first question, when you were asking the renewables, the total project outlay, what we are expecting is that in the next 5 years, we want to reach around [1,000] megawatt capacities with an estimated CapEx of around INR 5,000 crores. When it comes to IRR, yes, definitely. If we did not commercially viable in any of the project, generally, we don't take because there is no obligation to take any of the project if the IRR is commercially not viable. So generally, we take around 12% or 15% small projects. In case of larger projects, there are some intangible benefits or any obligation, maybe on the lower level thresholds we will take. But otherwise, if it is not commercially viable, then we don't take up any projects.

Question: Amit Rustagi - UBS Investment Bank, Research Division - Analyst : Okay. But we have accounted for some subsidy for the third quarter as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 02, 2022 / 5:30AM, BPCL.NS - Q3 2022 Bharat Petroleum Corporation Ltd Earnings Call Vetsa Ramakrishna Gupta - Bharat Petroleum Corporation Limited - Director of Finance, Head of Corporate Treasury & Director Whatever is the subsidy mechanism, whatever eligible for BPCL, that we will account on quarterly basis.

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : One question in terms of the CapEx...

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : In terms of the privatization, would you be able to elaborate on the steps, those are remaining before government can invite financial bids? That is the first question. Vetsa Ramakrishna Gupta - Bharat Petroleum Corporation Limited - Director of Finance, Head of Corporate Treasury & Director No. Other steps, definitely, government have to declare the [real] price and the (inaudible) adviser to calculate and the [SPL] to be finalized. There are some milestones they have to achieve before calling for the financial bids. But the entire process is being carried out by DIPAM only. So from our side, only whatever data quarterly basis, we have to provide the data and we have to (inaudible).

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : Sure, sir. And in terms of sort of the PDPP project, once we reach the sort of the optimum utilization level of 75% to 80% that we can sustain through Q4, would your earlier guidance of sort of it adds around $1 per barrel to the refining margin, does that still hold true? Or do you think that, that would change depending on the environment? Vetsa Ramakrishna Gupta - Bharat Petroleum Corporation Limited - Director of Finance, Head of Corporate Treasury & Director We are hopeful at getting recent price trend. The crude prices have gone up, whereas petrochemicals prices have come down. But longer term, this contraction should not happen. But overall, we are expecting whatever guidance, whatever we expect, that should continue, that should continue, provided refining -- project capacity utilization can get 70% to 80% level.