Release Date: July 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bharat Petroleum Corp Ltd (BOM:500547, Financial) achieved a throughput of 10.11 MMTPA, which is 116% of the nameplate capacity.
- The company recorded a Gross Refining Margin (GRM) of $7.86 per barrel, outperforming Singapore GRMs.
- BPCL's aviation business grew by 15% during the quarter, achieving an all-time high market share of 26.9% among PSUs.
- The company commissioned over 170 new retail outlets in the quarter and plans to expand its network to 23,000 by year-end.
- BPCL achieved the highest ever ethanol blending rate of 14.13% during the quarter.
Negative Points
- BPCL reported a negative buffer account for domestic LPG, indicating ongoing losses in this segment.
- The company experienced a degrowth of 0.32% year-on-year in High-Speed Diesel (HSD) sales.
- There is uncertainty regarding government compensation for LPG under-recoveries, impacting financial clarity.
- Discounts on Russian crude have significantly reduced compared to the previous year, affecting GRMs.
- The company faces potential cost escalations in its Mozambique project, with project costs expected to rise from $15.5 billion to around $19 billion.
Q & A Highlights
Q: My question is related to the buffer account for domestic LPG. You reported a negative amount by the end of this quarter and are still losing money on the sale of domestic LPG. Is there any clause related to the buffer account that the government will reimburse the under-recovery if it remains negative for a certain period?
A: LPG is still a controlled product with pricing decided by the Government of India. Currently, there is no budgetary support announced for the losses incurred. We have taken the hit to the P&L and are awaiting a compensation mechanism from the government.
Q: What was the share of Russian crude BPCL processed during the quarter?
A: 39% of our entire throughput was from Russian crude during this quarter.
Q: Can you elaborate on the new refining unit and petrochemical unit in Andhra Pradesh? What was the CapEx during the quarter and the guidance for FY25?
A: We are exploring new refining capacity due to a gap between our refining capacity and market share. We are still studying the configuration and location. The estimated CapEx for this year is INR16,400 crores, with INR2,600 crores spent during this quarter.
Q: Can you comment on your market share growth, especially in diesel, and how you plan to defend your position against private players?
A: This quarter, we grew at 3.2%, slightly below the industry. Diesel saw a degrowth due to private sector volumes returning to normal levels. However, we expect positive growth in diesel in the coming quarters.
Q: Have you seen any impact on industrial product margins due to competition?
A: Competition has always been there in the industrial segment. We do not foresee any significant squeezing of margins and expect similar levels to continue.
Q: What is the status of the Mozambique and Brazil blocks in your E&P activities?
A: Mozambique is still under force majeure, but security has improved. We expect positive developments in the next quarter. For Brazil, the development plan has been submitted and we are awaiting approval.
Q: Do you have any turnaround plans for your refineries this year?
A: Yes, both Kochi and Bina refineries have turnaround plans. Bina will have a 15-day turnaround, and Kochi will have multiple units with a 30 to 45-day turnaround starting from September to October.
Q: What are the key criteria for setting up a new refinery?
A: We aim to increase our petrochemical portfolio to 15% of product sales and address the refining capacity shortage. We are exploring configurations that balance refining and petrochemical outputs.
Q: Can you provide an update on your ethanol blending project and any plans for reducing transportation costs?
A: We are currently blending about 14% ethanol, aiming for 15% this quarter. The government has mandated 20% blending from FY25. We will share detailed procurement numbers separately.
Q: What is the cumulative investment in Bharat PetroResources Ltd (BPRL) to date?
A: Our total investment in BPRL is around INR39,358 crores, with INR10,700 crores in equity and the balance through borrowings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
