Hindustan Petroleum Corporation Limited (HINDPETRO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Hindustan Petroleum Corporation Limited Q3 FY '25 Results Conference Call hosted by Antique Stockbroking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan from Antique Stockbroking Limited. Thank you, and over to you, sir.

Thank you, Sejal. A very good morning to all the participants and the management of HPCL. We have with us Mr. Rajneesh Narang, Director Finance; and holding additional charge as CMD; Mr. S. Bharathan, Director, Refineries; and Mr. K. Vinod, Executive Director, Corporate Finance and CFO. Once again, extending a very warm welcome to all the participants and the management. I would like to hand over the floor to HPCL Management for their opening remarks.

Good morning, everyone. I'm Rajneesh Narang, Director of Finance, with the additional charge of C&MD HPCL. Yesterday, we had our Board meeting for the quarter 3. It's a matter of right for us to say that we had an exceptional Q3 quarter. Now during this quarter, we had a profit after tax of INR 3,023 crores vis-a-vis INR 529 crores in the Q3 of financial year '24. The improved performance is attributable to the robust physical performance and operational efficiencies in both our refinery and the marketing division coupled with the improved margins, which we had. The total income -- the stand-alone revenue from operations is INR 1,18,936 crores vis-a-vis INR 1,18,443 crores during the third quarter of financial year '24. Average GRM during the third quarter was $6.01 per barrel, vis-a-vis $8.49 per barrel during third quarter of the previous financial year. During this period, the Singapore GRMs were around $5 a barrel, and since Singapore GRM do not factor in the fuel and loss and the inventories losses and gains, if I consider that aspect and the core GRM for the HPCL is $6.89 per barrel vis-a-vis the $5 of Singapore. During this period, HPCL refineries recorded its highest ever crude throughput of 18.53 million metric tons, operating at 106% of the installed capacity. Virtually, if you see, there is an increase of 12.4% over the throughput 16.49 million metric tons in the corresponding previous year. If we see the Q3 performance of the refineries, the crude throughput was 6.47 million metric tons, operating at 111% of the installed capacity, registering an increase of 21.2 million metric tons, for the throughput of 5.34 million metric tons during third quarter of financial year '24. Now if we see today, effective January also, we have started operating the Vizag refinery at the full capacity of 15 million metric tons. During this period, April, December, HPCL recorded highest ever sales volume of 37.12 million metric tons, registering a growth of 7.6% as against 34.49 million metric tons during the corresponding previous year. In terms of our quarterly sales volume, it is 12.87 million metric tons, registering a growth of 8.2% as against 11.9 million metric tons in the corresponding quarter of last year. If you see the performance of HPCL on the domestic front, that the sales volume growth was 8.2% during the quarter as against the industry growth of 6.3%. So we have been consistently growing above the industry. And the growth is 6.5% during April-December '24 as against industry growth of 4.8%. In fact, HPCL has recorded market share gain of 0.36% during the third quarter financial year '24. If we see the growth in terms of the Motor Fuels, that is MS and HSD in the third quarter, we sold 7.85 million metric tons, a growth of 6.3% over the corresponding quarter. And in case of LPG, the company achieved a sales volume of 2.31 million metric tons, again, a growth of 4.9%. The industrial products, that is the direct sales where we sell the product to our industrial customers and all. The sales volume was 1.25 million metric tons during the quarter, a growth of almost 25% over the corresponding period last year. Aviation continues to show robust performance with a growth of 26% over the third quarter of financial '24 with a sales volume of 285 million TMT during this quarter. We expect that in the ATF in this current financial year, we'll be crossing the 1 million metric ton mark for the first. The HPCL Lubricant segment, again, sales volume was 178 TMT, a growth of 11.5% over the corresponding quarter. To ensure that the product is available -- made available at all our selling points and the locations, the pipelines throughput has also been maximized to 6.93 million metric tons, a growth of 3.3% over the last year. In terms of the CapEx expenditures during this third quarter, we have spent almost INR 2,900 crores. And cumulatively for the period April to December, around INR 9,500 crores have been spent. And in the month of January, we have commissioned our 5 million metric ton Chhara LNG re-gassification plant when the cargo was downloaded -- was downloaded at the tanks over there and the commercial operations will shortly be started. Now this unit is being operated under our wholly owned subsidiary, HPCL LNG Limited. We had in this quarter -- in the previous quarter, that is in the Q3, taken the Board approval for a new project for Mumbai refinery, that is the Lube Modernization and the Bottoms Upgradation Project. The estimated cost is almost around INR 4,700 crores, and the project is scheduled to be completed by March '28. The project would enhance the base oil production of the refinery from 475 KTPA to 765 KTPA with production of superior grade base oils of Group II and Group III. In addition, it will also increase the capacity of bitumen by approximately 487 KTPA per annum with upgradation of fuel oil to bitumen. Currently, the fuel oil is getting exported. And as such, we do not get a better realization. But with this conversion to bitumen, we'll be able to realize better. And as such, this will result in not only the improvement of distillate yield for the Mumbai refinery, but would also add good margins to the refinery. During this third quarter, Mumbai refinery commissioned the VGO hydrotreating in DHT. This will increase the MS production by almost 100 TMT per annum. As regards our 9 million metric ton grassroot refinery in Barmer, the same is progressing in full swing. As on 31st December '24, the total commitments on the projects are INR 71,814 crores. And the actual capital expenditure, which has been done is approximately INR 53,000 crores. The refinery and petrochemical complex is expected to be progressively commissioned during the current calendar year. We would first be commissioning the refinery unit, and we are targeting that by March '25, we'll be doing the mechanical completion. And after the next quarter, the unit would be commissioned. And followed with that, the pet-chem unit will be commissioned. As regards our 3.55 million metric tons per annum residue upgradation unit at Vizag refinery, the mechanical completion -- the same -- the project -- the unit has been mechanically completed and currently pre-commissioning activities are underway. The OISD and PESO approvals will be coming and thereafter, the hydrocarbon would be taken. In fact, OISD will be visiting the facility in the next week. So this is the first unit in the world using LC-MAX technology, which will enable highest conversion of bottoms, thereby significantly improving the GRMs for the refinery on the full capacity. Although this capacity of this unit is 3.55 MMTA per annum, but we'll be able to get a better distillate yield on the entire 15 million metric ton capacity of the refinery. As such, there would be a significant margin accretion to HPCL on account of the commissioning of this facility. During this quarter, we commissioned around 450 retail outlets, taking the total number of outlets to 22,953. The company also commissioned 6 LPG distributorship, taking the total number to 6,370. We also commenced CNG sales in our CGDs in Darjeeling, Jalpaiguri and Uttar Dinajpur GAs and commercial PNG sales in Shahjahanpur Badaun GA, thus strengthening our presence in the Eastern part of the country. During the quarter, the HP Green R&D Center entered into an MOU with EIL as an exclusive technology and engineering partner for engineering, marketing and commercialization of the HP-PSA technology, which was indigenously developed at our R&D center. This quarter, the R&D center has filed 14 patents, taking the total patents filed to 620 out of which 236 patents have been granted till 31st December. As part of our value unlocking initiatives being undertaken for the lubricant business, benefit for the rollout of supply chain, cost optimization, product mix spread and customer engagement initiatives have started accruing. Simultaneously, approval for the carve-out of the business continues to be actively pursued with the appropriate authority. We are already seeking approval from the government for carve-out. And as on date, we are yet to get the approvals. But the moment we get it, it will take another 9 months for us to do the carve-out. As regards the non-fuel business of the company and providing value-added services to the customers, we have added 3 Happy Shops, taking the total number of HapPy shops nationwide to around 482 numbers. This segment that is the Non-Fuel retail business, non-fuel business is under extreme focus for the company, and we intend to make more investments in this and try to capitalize on the retail space in terms of higher revenues from this segment. During this quarter, Vizag refinery commissioned wet air oxidation unit, which is in advanced stage of -- which is an advanced low-pressure technology for treatment of Spent Caustic Streams. In addition, environmental benefits would also accrue on account of this. Our wholly owned green subsidiary, HP RG has signed MOUs with the government of Rajasthan for setting up solar and wind hybrid project. We have sought around 2,000 to 3,000 acres of land from the government for setting up the new green renewables, the solar and hybrid projects over there. Similar MOUs have been signed with the government of Bihar also. Further, as regards the green part is concerned, we have issued 12 LOIs for CBG plants, taking the total number of active LOIs to 141 with total CBG production capacity to 878 TMT per annum. In terms of the ethanol blending activities, we have done 16.2% during the quarter and blended off approximately 57 crore liters in MS. And we have commissioned additional 50 CNG facilities in this quarter, taking the total number of retail outlets with CNG facilities to 1,850. And in terms of EV charging, this facility -- we have crossed the 5,000 mark of EV facilities at our outlets. So this is what I wanted to share before I can take up the questions. Now the forum is open for any questions on our performance. Thank you.

[Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities.

I have 3 questions. Number one, you mentioned about the refinery part of the Rajasthan -- of the Barmer refinery getting completed by March and maybe commissioning by June. In how many months can we expect the mechanical portion to be commissioned?

Pet-chem would take maybe by September, we'll be able to do the mechanical completion, followed by that, the commissioning would happen.

So sir, is it safe to say FY '27, we should be able to see year 1 of complete operations of the Barmer refinery?

Yes, '26-'27, definitely but we are hoping that December '25, we'll be able to commission. So the first quarter, maybe some stabilization issues would be there but '26-'27 would give the full benefit.

Right. Got it. Sir, the second question was in this quarter, how much of our crude came from Russia discount? And what is our contract situation with respect to Q4? Have we tied up some volumes for Jan and Feb or it's completely open as of now? So how are we looking to mitigate the disruption to whatever extent it happens of Russian crude?

See, we are on a monthly basis, consuming almost 35% to 40% of Russian crude. We have already tied up for the same -- rather our entire crude requirement up to March has already been tied up. That includes some cargoes from the -- of Russian cargo also. I don't consider this as a disruption because it's not that perennially, we have been only using Russian crude. Prior to that also, we were running operating the refineries. Only thing is that the Russian crude after the discount had come, it was adding more value to process the same. So we were using it. So enough of crude is available. There is no dearth as regards the crude availability is concerned. With the commissioning of our Vizag refinery where we -- with rough and all coming in, our -- the capability to produce the heavier crude will further increase rather we can expand the basket of crude. Today also, we are getting the crude from almost 40-odd countries. So there's no issue as regards to the availability of crude is concerned. Crude is sufficiently available, both heavy crude as well as the other crude. And we don't foresee any disruption as regard to the crude participants.

I understand. My point was more about disruption. What I meant was that, obviously, on the cost side, it would have an implication, whether small and big something remains to be seen but that discount will obviously not be there. So that was my question, sir. I understood your point.

Here also, think I it is too premature to say that the Russian crude will not come at all. I guess with these decisions, the U.S. sanctions and all the immediate reaction is that this crude may not come and all but we'll have to wait and see as to how the market unfolds, what is -- how the supply chain on this front happens. And accordingly, then maybe it would be better to conclude rather than straight away jump to a conclusion that the Russian crude will not come at all. Let us wait and see as to how things unfold.

One last question, if I may, with respect to the LNG terminal at Chhara, have we -- of course, our internal requirements might be there, which we will use this terminal. But other than that, have we signed any long-term offtake contract from this terminal?

We are progressing as regards signing of the long-term contract is concerned. It will may be concluded in the very near future. Yes, we -- till the time we don't tie it up, we'll be getting the cargo on a spot basis and meet the requirement. And maybe we may pool it with our domestic gas and try to sell it in the market. Already, there are some potential parties who have already approached us for the capacity booking. So this terminal is going to be a tolling model. So whether we bring our own cargo or anyone else can bring and also store it over there. So this is going to operate on a tolling basis. In terms of our requirement, we will be sourcing for HPCL own captive use plus for Rajasthan refinery and also for HMEL. So if I look at it, maybe in the near future, we may have our own captive requirement of 1.5 million to 1.75 million metric ton plus the opportunities in the market.

The next question is from the line of Yogesh Patil from Dolat Capital.

Sir, your debt has declined by INR 12,000 crores approximately compared to the quarter second FY '25. What was the major cash flow, which helped you to repay the debt? Is there any adjustment?

There's no adjustment. It is better operational performance, which is getting reflected in the results also. And one area is just, yes, around INR 2,000 crores, it has come down because the oil bonds had matured. So that were used for liquidating the loan.

Okay. And sir, pertaining to the same, in the last quarter guidance for the Vizag refinery unit, you said that INR 11,000 crores is to be capitalized and which is expected in quarter 4 FY '25. Post commissioning of this Vizag RF facility, will you consider it? And will it increase the debt again? Is that a correct understanding?

No, no. It will see -- this amount, when I say we'll be capitalizing means that amount has already been incurred. Now as regards the total capital expenditure is concerned, more than 97%, 98% of the expenditure in Vizag refinery has already been done. It's only -- when we say capitalized means we'll be transferring it from work in progress to the asset.

Okay. And sir, is there any oil product inventory losses during the quarter? Could you please share the number with us? And how many days of oil product inventory generally you maintain?

See, if you see during the period, in Q2, the Brent crude was around -- averaged around $80 a barrel. And whereas in the Q3, the average crude was around $75 a barrel. Now if you look at it, the prices had softened during this -- on account of which we had inventory losses. And during this quarter, in refinery, we had a loss of inventory loss of INR 355 crores. And in marketing, around INR 460 crores was the inventory loss. Cumulatively, for the period, April-December, in refinery, it is INR 1,100 crores. And in case of marketing, it is INR 1,450 crores.

What was the amount for the quarter 3 in case of a marketing segment, inventory loss?

INR 460 crores. And in terms of number of days, at the crude, we have around 15 to 20 days of inventory. And in case of finished goods, it is around 25 to 30 days.

The next question is from the line of Sabri Hazarika from Emkay Global Financial Services.

So a few questions. Firstly, so now what kind of GRMs are you targeting for next year on the stand-alone business, Mumbai and Vizag combined?

See, if you look at the forwards of Singapore up to July and all, the GRMs are likely to be in the range of $5 to $6 a barrel. So normally, we make higher than the Singapore GRM. So that trend would continue. And with the commissioning of the rough unit at Vizag refinery, we'll be adding $2 to $3 per barrel more at the Vizag refinery. So that will be an incremental revenue.

Okay. And second question is on HMEL. So can you share with us the profitability figures and the GRM for Q3, in particular, I saw the 9-month GRM in the presentation but for Q3, how much it would be?

Q3 is around $9 a barrel over the GRM.

So this includes the pet-chem part also or it's just...

No, no, this is the refinery part.

Okay. And what was the profitability for Q3?

There was a loss as regards to the integrated operation is concerned. The loss was -- yes, INR 700 crores is the loss. Primarily, the loss is in the pet-chem part only.

And when do you expect any sort of like turnaround or profitability on this as a combined unit?

No. See, in fact, the polymer prices are subdued. We hope that there will be a trend -- reverse trend on the same. And the moment that happens, maybe the -- it will start operating or it should start reflecting in the results. The refining part is absolutely no issue. Only the pet-chem because of the subdued prices is what is hitting the...

So it's operating normally as a whole. We are just saying it's because of the polymer prices only the losses are there?

Yes. As regard the operating part is concerned, it is operating beyond 90% capacity. And in terms of the EBITDA, EBITDA is positive for the refinery. There is an operating profit but the interest and depreciation is what is pulling it.

And last question, so what is your overall view on LPG subsidy? And are you expecting the same? Or have you got anything? I mean, have you like pushed for it recently?

See, the total under recovery for us on LPG account as on this Q3 quarter is almost INR 7,600 crores, out of which INR 3,100 crores is in the Q3 itself. We have also read in media that the government is likely to consider the same in the budget. Maybe next week, we'll come to know as to how much subsidy is being allocated on that count. And we are hopeful, definitely, the government will consider it, and we'll be able to realize it in this financial year.

The next question is from the line of S. Ramesh from Nirmal Bang Equities.

So if you look at your refining performance, can you help us understand how you have managed to improve the refining margins in 3Q? And how do you see the current spreads? Because if you see the global spreads, they are a little bit weak and retail margins are under pressure. So how do you see the performance in the current quarter in terms of refining and marketing?

See, if you see -- the margin is concerned, in my initial mention, I made a reference that it is not only the margins -- better margins but also the operating performance, which has got us the incremental margin. Now if you see both our refineries are operating at like Vizag and Mumbai operated at more than 110% of the capacity. Even if you see the fuel and loss has been significantly controlled. The fuel and loss was almost 6-point-something percent in Mumbai refinery and in case of Vizag, it is 7%. So both the operational availability at these refineries has significantly improved and the throughput is being run at the full -- more than the nameplate capacity on account of which we are getting higher yields as well as the products. As regards the GRMs are concerned, the GRMs have been -- like Singapore GRMs benchmark, I gave that it is around $5 a barrel. So that same trend is likely to continue in the near future as per the forwards, which are available. So we trend -- the same would be continuing. Yes, if you see right now, there has been softening as regards to the MS gasoline are concerned in Singapore. But the FO cracks are -- the negative FO cracks have strengthened. So that is a plus factor. But in the near future, if you look at the next 2 quarters, the GRMs as were there in the Q3 would continue, is what is the prediction.

Okay. So now if you look at the impact of Vizag commercialization, in terms of the interest and depreciation based on the 9-month numbers, how do you -- what will be the incremental impact of interest and depreciation, say, from next year for HPCL stand-alone?

It will go up by another INR 500 crores to INR 600 crores.

Interest and depreciation together?

I'm talking -- interest will remain unless I further reduce the borrowing. And if I continue to make good margins, the borrowings will only come down. So borrowings have already got factored as regard our current level is concerned. Only to the extent of what I'm capitalizing that would come in the P&L that the total what I have incurred is around INR 2,600 crores in P&L and around INR 700 crores is -- INR 600 crores to INR 700 crores is there in the -- is getting capitalized. So that will move to the P&L. So the additional interest impact would be around INR 600 crores to INR 700 crores and depreciation would be around INR 600 crores.

Okay. So in HMEL, can you help us understand the depreciation interest year-to-date, you said there is a positive EBITDA and the loss because of that. So if you can give some numbers, it will be grateful.

I will share it with you separately, okay?

Okay. So if you look at the refining capacities globally, is there any number you can share in terms of how much you expect in terms of capacity closures to the extent that, that may help the underlying spreads? What is the sense you get on that?

See, in the near term, normally in the month of January, February, there are a lot of shutdowns -- planned shutdowns, which are taken. So I'm only hoping that the refining margins would only improve because the product -- there would be a bit of product shortages during this period. So the margins are likely to improve only. I don't foresee a continuous declining trend as regarding margins are concerned.

And the last thought on the LNG subsidiary. Have you started commercial operation in 3Q? And is there any expectation of a loss in the next 1 or 2 quarters before you are able to achieve breakeven?

You're talking about which company?

HPCL LNG subsidiary.

Yes. Now we'll be starting the commercial operation. So initially, yes, definitely, there would be some losses but that will be made up in -- once we achieve the capacity utilization.

And when would that be?

We are hoping maybe in 1 year or 2 years, we'll be able to breakeven as regards the operation.

So if I can squeeze in one more thought in CGD, what is your thought in terms of ramping up and achieving EBITDA positive, the stand-alone GAs?

We are already EBITDA positive as regards our stand-alone GAs, in Jind, Sonipat and all, we are positive as regard our EBITDA .

The next question is from the line of Sumeet Rohra from SmartSun Capital Private Limited.

Sir firstly I...

Sorry to interrupt sir, I would request you to please use your handset, your voice is not very clear.

Yes sure. You have done extremely splendid financial performance in terms of core metrics. So sir, actually, I was just looking at it that as you highlighted that the LPG under recovery is about INR 7,600 crores, which effectively is not our domain, which is the government of India. And in spite of that, you reported INR 4,100 crores. So sir, effectively, if I compare year-on-year on the 9 months, of 31/12/2023, you are exactly at the same metrics, which is INR 11,800 crores, which is sir highly commendable in such a challenging environment. But now, sir, here my question to you is more as an investor. So sir, if you see -- I mean, adjusting for the LPG, which again is not HPCL's problem, you have done a INR 55 EPS. And sir, assuming that crude continues to remain where it is. And with Mr. Trump now talking about Saudi to lower oil prices. So effectively, Brent would be around -- somewhere around here or maybe lower by $5. So effectively, sir, your core operations are doing extremely well. And you would probably end the year with a similar number like last year, which is about INR 14,000 crores, INR 15,000 crores, which is commendable. Also, sir, in terms of I see your throughput is up by about 12%, 12.5%. And your sales -- market sales are also up about 9%, 10%. Now sir this is in spite of a economy, which is challenging and you see today, various sectors are posting degrowth. So it is extremely exciting that you were doing so well in an environment which is as tough as it is. But sir, now my question is more from an investor point of view. The thing is that today, in spite of you doing so well, it doesn't deserve the kind of valuation which HPCL commands, right? Because I mean, if you've done -- if you end up with a INR 75 EPS for the year, and in stock -- a high-quality stock, which has got an ROE of 25%, surely does not deserve to be trading at 5x multiple, right, in spite of having a lubricant, which is basically 3x the size of Castrol, so effectively, sir, our lubricant itself would be about, what, about INR 30,000 crores, INR 35,000 crores on a bare minimum. So sir, if some measures could be taken to expedite the value unlocking, that would go a long way in building the value for this glorious entity, which you have. Now sir, my question to you is basically on the financial metrics, which are as strong as they are, so sir, my sense is that the $5 billion EBITDA and the INR 16,000 crores to INR 18,000 crores PAT, which you were expecting in FY '28 could actually come as soon as next financial year, right? Because I mean I clearly see that your Vizag Refinery, which you explained, the residue upgradation project, is also now going to commission very soon. So sir, can you explain so that will basically improve GRMs by $3 to $4 on the entire 15 million, 16 million metric ton, right? So that will actually improve the financial metrics in a big way, right, sir? Am I correct on that?

Yes, you are right. And simultaneously, we're also working on debottlenecking Vizag Refinery and maybe the capacity will go up by -- will go up to 17 million metric tons. So that -- I think Director Refineries is here, he can add something on that.

Yes, once we have already stabilized most of the units under this modernization project. Now we are looking at better utilizing the capacity. So definitely, in the coming years, we'll be crossing 17 million metric tons, along with all the other value-added products.

Sure, sir. And sir, sir, just I mean one small point I have, is that, sir, now with our peak debt, which is now gone and you'll be throwing out cash like water. I would sort of seriously request that at some point of time, you should consider a liberal buyback because, I mean, HPCL has been the only company in PSUs to do a buyback from market. So I'd all request you to please consider the same because clearly, this company does not deserve the valuation which it is getting today sir. So that's something I would really request you to please consider.

Yes, definitely, we'll evaluate the same. And let us hope that what you have stated and what we envisage, we consistently deliver on that. And definitely, we'll review all what you are suggesting. Thank you.

The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund.

A couple of questions from my side. On the HMEL, what would be the breakeven spread needed on polymer for the operations to return to the profit? Would you be able to give us some color?

See, a margin of $150 to $170 per metric ton is what would enable HMEL to be breakeven.

And what would be the current margin level against this?

They are getting around 70 to 80 . Today, the prices are quite very muted, very soft, and the entire sector is struggling on this account. So let's see, there are 2 things. One is from that regard, the operations at the HMEL is concerned, their facilities are fully stabilized. They are operating at more than 90%, 95% of the capacity. The pricing front, they are approaching -- we are approaching the government also as to look at, as to whether they can put in some tariffs so that the product does not come in -- on various revenues, attempts are being made as to how we can improve the -- this entire pet-chem industry, the entire sector.

And the HMEL refinery, with the Chhara LNG terminal, will we be able to start picking up gas, when the pipeline is complete?

Yes, yes, it is settled. Our Chhara terminal is connected to the natural -- national grid. So that is not going to be an issue at all.

HMEL Pipeline is connected to the Mehsana-Bhatinda pipeline where last leg of few kilometers were left. So is that leg also complete for HMEL to receive the gas?

Yes. To my knowledge, GIGL or GITL had already connected there.

HMEL is continuously consuming gas for more than 1.5 years now.

All right. And second question is on the Barmer Refinery. You mentioned about the CapEx commitment of INR 71,000 crores. What is our comfort on sort of managing the CapEx within the targeted budget? Or is there a possibility of any CapEx escalation?

As of now, we said that the commitment, what we have made is around INR 71,800-odd crores. So most of the EPC contracts and all those have already been done. So those things have already got factored as regard the commitment is concerned. So what would be only the soft cost or the IBC, which will get -- which would be coming here. So with the commissioning in this current financial -- current calendar year being planned. I will have to work out as to what would be the exact details, but not nothing significant is likely to.

And in terms of the project contingencies, what level of contingencies would be available to take care of any potential escalation?

That's what I stated. All EPC contracts and all have already been placed. And most of them are -- some have reached a stage of 95%, 97%. There are 4 units which already got commissioned. So now at this stage, I think contingencies are not an element to be given too much of weightage because if the unit has reached a significant advancement as regard their execution is concerned.

The next question is from the line of Amit Murarka from Axis Capital.

So the first question was around [ Barmer ] Refinery. So you said that you're looking at completion by end this year. So the debt is currently not getting consolidated, I think, because of the JV structure as we had mentioned earlier. So once it gets commissioned, do you start including the debt in your consol books? Or will it stay outside the books?

No, it will not be consolidated because as per the Ind-AS requirements, we cannot -- we will not be consolidating the same. But for the sake of investors or anyone, analyst requirement, we will definitely share those details, not in -- even today, the debt is almost INR 34,000 crores in HRRL books.

Got it. So even post commissioning, you will not be consolidated in will just be associated income or loss for...

We will not be doing the line-by-line consolidation because the terms of the JV agreement, and all, we have got it analyzed as per that strictly in line with the Ind-AS requirement. We will not be consolidating but it will -- we'll be putting only a line entry for the profit consolidation. But any details which are required, that will definitely be shared, not an issue at all.

And is there any underwriting from you for that debt?

No, there's no underwriting both the promoter that Government of Rajasthan and HPCL have given the sponsor support undertaking that. Both of them have given it for their respective shares. We hold around 74% and the government of Rajasthan holds 26%.

Understood. Understood. And also on the CapEx plan, so -- could you kind of give at least some understanding about next year's CapEx outlook?

See, this year, we may be ending with the CapEx of INR 13,000 to INR 15,000 crores. And the same trend would continue for the next few years.

The next question is from the line of Somaiah from Avendus Spark.

I have a few questions. Sir, first, can you give some color on the Vizag bottom upgradation project? So in terms of the input and output and what are the kind of spreads that we are seeing being both the products? When you see a net impact of $3, $4 GRM?

Yes, Vizag, this particular unit is designed for almost 93% conversion into distillates. And as already told by Chairman, the dollar per barrel on full throughput of the refinery will be $3 to $4, fuel oil will be fully eliminated.

And the output would be bitumen?

The output of the plant is mainly diesel, naphtha and gas oil for secondary cracking.

Got it, sir. Sir let's say, between spreads that you see between, let's say, FO to bitumen today, where are the spreads like?

FO to bitumen spread about INR 10,000?

It's around INR 10,000. INR 10,000 per metric ton.

Got it, sir. sir, and also when you said CapEx around INR 13,000 crores to INR 15,000 crores kind of a run rate. So now you have announced this INR 4,700 crores. So this is included within that, the modernization project?

Yes, yes, it is. We'll be -- we have also started the Visakh-Raipur pipeline. And shortly, we'll also be doing the COT at the Mumbai refinery. We have various other projects also up our sleeves, those also would be -- once we take the Board approval, we'll be sharing with you all. We have one or 2 more pipelines, which are being planned for LPG here.

Any split if you can give between refinery marketing CGD within this INR 14,000 crores per annum CapEx?

We'll be around INR 4,000 -- INR 3,000 crores to INR 4,000 crores in the refining segment. And in terms of marketing, we do around INR 6,000 crores to INR 8,000 crores, and the balance is the equity contribution, which we gave in our various JV subsidiaries, that is a HRRL, HPLNG and others, and even HPRGE where we are doing a lot of renewable projects. So broad split is refinery marketing and the corporate, that is the contribution to the JV subsidiaries.

Got it, sir. Sir, Barmer, how much of equity contribution is still pending from our side?

We have given almost INR 13,000 crores, and the total contribution from our end is around INR 18,000, crores.

Understood. Sir, also, when you said Chhara, that 1.5 MMT of gas demand for internal consumption. So is there something that we are currently drawing from someone else and that gets diverted or it's entirely fresh demand once Chhara comes on?

Today, we are using gas in a limited way in our Mumbai refinery. So that we are sourcing it from -- we are purchasing and using the gas. At Vizag Refinery, the Srikakulam-Visakhapatnam pipeline that has to be completed. In fact, the EOI is already on that was being executed by APGDC but they have now PNGRB is advertised again for completing the pipeline from 20, 30 kilometers is left out. Otherwise, the refinery as part of our VRMP, we have already make it compliant for using natural gas. Rajasthan Refinery will be fully compliant and HMEL is already using gas. So all these 4 units or refineries will be switching to gas, and so that would be one major anchor for us as regard the gas is concerned. Plus, once we tie up with -- for our long-term gas, we'll -- we also aggressively marketing it marketing the gas and also for the various GAs, which we are up, we are operating in almost 25 GAs in 14 states. So we'll be also using our own gas since it is connected already to the grid.

Sir, any breakeven utilization that we have for Chhara that we're looking for?

At 30%, it gets -- we achieve the breakeven at 25% to 30%.

Sir one bookkeeping question. If you can give the net debt number as stand-alone entity and also at HMEL, Barmer you said is around INR 34,000 crores.

HPCL level INR 54,020 crores is the total debt. The long-term debt is INR 44,000 and short term is around INR 10,000.

I mean this is the net debt number sir, or is it gross?

This is a net debt total.

Sir also at HMEL?

HMEL is around INR 33,000 crore, INR 34,000 crore.

Thank you. Ladies and gentlemen, due to time constraint, we will take that as the last question. I would now like to hand the conference over to Mr. Varatharajan for closing comments.

Thank you, Sejal. I'd like to give the floor to Mr. Rajneesh, if he has any closing comments.

Thank you for the various questions. We'll continue to put in our efforts to replicate the performance both in terms of operational and the financial parameters. Yes, I can only say that you have been supporting us all along. The -- our CapEx plans, which we had unfolded a few years back, they are now almost on the verge of getting completed. Maybe this is -- this year is going to be the one where we will start it -- we will start realizing the incremental benefits out of these. So better times are there ahead of us. So thank you for all your support, and God bless you all. Thank you.

Thank you, sir, I wish to thank the management as well as all the participants who are taking time out to have this discussion. Wishing you all the best, sir. And thanks to all the participants. Have a nice day.

Thank you. On behalf of Antique Stockbroking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.