Indian Oil Corporation Limited ($IOC)

Ladies and gentlemen, good day, and welcome to Q4 and FY '26 Earnings Conference Call of Indian Oil Corporation Limited, hosted by Antique Stock Broking. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan Sivasankaran. Thank you, and over to you, sir.

Thank you, Danish. A very good afternoon to all the participants and the management of Indian Oil Corporation. I'd like to extend a very warm welcome to all the participants and the management of Indian Oil Corporation for this conference call to discuss the fourth quarter FY '26 numbers. We have with us management of Indian Oil Corporation, represented by Mr. Anuj Jain, Director Finance; Mr. Nitin Kumar, ED Corporate Finance and Treasury; Mr. Pramod Jain, CGM Treasury. Without much ado, I'd like to hand over the call to Mr. Anuj Jain for his opening remarks. The floor is yours, sir.

Yes. Thank you.. Good afternoon, everyone. 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 fourth quarter results of financial year 2025-'26. 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 all of you. 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. 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. The ongoing conflict between the United States and Iran, and the consequent disruption in the Strait of Hormuz have created significant uncertainties across the global hydrocarbon supply chain and in India. As you are aware, the Strait of Hormuz normally handles nearly 1/5 of the global oil trade and remains one of the most critical energy transit corridors in the world. Due to the escalation in the regional tensions, vessel movement through the strait has witnessed a severe contraction, resulting in heightened volatility in crude oil, LPG and natural gas markets. The LNG Qatar which accounts for approximately 20% of global LNG supply compelling the operator to declare a force majeure resulting in acute supply disruptions and significant tightening of gas availability globally. These developments have created headwinds of an extraordinary nature, not merely a market challenge, but a structural supply disruption of global consequence. In response Indian Oil, in close coordination with government has acted swiftly and decisively to navigate the situation and to ensure uninterrupted energies availability across the country. We have ensured comprehensive supply continuity including diversifying our crude and gas sourcing across alternate geographies and trade routes, optimization of crude procurement strategies and ramping up of domestic LPG productions. Now turning to our operational performance for financial year '25-'26, notwithstanding the turbulence in the external environment. I'm proud to report that this has been a landmark year for Indian Oil on virtually every operational dimension. During the year, we recorded the highest ever annual refining throughput in the company's history, achieved record consolidated annual sales volume, achieved highest-ever lubricant sales and also registered the highest petrochemical sales volume for the year. This year, from the perspective of profit, profit after tax is INR 36,802 crores in financial year '25/'26 as against INR 12,962 crores in financial year 2024/'25. This quarter, we have withstood a PAT of INR 11,378 crores vis-a-vis preceding quarter, which was INR 12,126 crores Revenue from operations during this quarter stood at INR 232,855 crores against INR 231,769 crores in the immediately preceding quarter of this year. The sequential increase in revenue was primarily driven by a significant improvement in sales volume across key business segments during the quarter. The revenues for the corresponding quarter of financial year '25 was INR 217,725 crores. On yearly basis, the revenue for the financial year '25/'26 is INR 886,224 crores versus INR 845,513 crores for the preceding financial year -- financial year '24/'25. These achievements will further strengthen the strength of our integrated business model, robust infrastructure network, operational excellence and the unwavering commitment of our employees across the country. I would like to reiterate that despite the challenging global environment, Indian Oil remains fully committed to ensure uninterrupted energy supply to the nation, while maintaining operational resilience across the value chain. We continue to maintain strong focus on project execution and long-term strategic growth initiatives. We remain committed to timely completion of these projects to support India's growing energy demand and the nation's energy transition objectives. Now the operational and financial highlights will be briefed by Shri Nitin Kumar, Executive Director, Corporate Finance and Treasury Indian Oil to you. Thank you.

Thank you, sir. Dear investors and analysts, very good afternoon. Kindly note that today's discussion may include forward-looking statements which are based on currently available information, assumptions and expectations and are subject to uncertainties that could cause actual results, performance and achievements to differ materially from those expressed or implied. Participants are advised to refer to the company's latest filings and regulatory authorities for a more detailed discussion on risks and uncertainties. The past quarter witnessed important developments both globally and domestically. On the global monetary front, the U.S. Fed has kept the interest rate unchanged in the range of 3.5% to 3.75%. RBI has also kept interest rate unchanged at 5.25%, maintaining a neutral strength. Energy prices have increased globally due to supply disruption in Middle East on account of U.S. Iran war, which will put pressure on inflation globally. This may keep the interest rate higher for a longer period. Coming to the Forex market, rupee has experienced pronounced volatility with the Indian rupee depreciating by about 11% during the year against the USD from INR 85.48 to INR 94.84 per dollar, and continues to remain under pressure in the current fiscal, driven by global geopolitical developments. As per PPAC report, HFT consumption witnessed 4% growth, MS consumption witnessed 6% growth and overall petroleum product consumption have also grown by 2% in financial year '25/'26 on a year-on-year basis. IOC has achieved overall domestic petroleum sales volume growth of about 4.8% due to the positive increase in market share. Now let me briefly touch upon the quarterly performance highlights. Talking about the numbers, the average price of crude that is Indian basket during this quarter increased from $63.87 per barrel to $83.01 per barrel, which is an increase of about 30%. From the immediately preceding quarter, that is quarter 3 of financial year '26 due to ongoing U.S.-Iran contract, leading to supply disruptions. Bharat Private Limited, a 50-50 joint venture of Indian Oil has announced the oil discovery in operated onshore Block 1, Abu Dhabi on 13 January '26. The exploration concession was awarded to this company in March 2019. Let me briefly touch upon the major verticals. Refineries. During the year, refineries achieved highest ever crude throughput of 75.5 million metric ton with a capacity utilization of 107.4% in comparison to throughput of 71.6 and capacity utilization of 101.9% during the previous year. For Q4 '25'26, the throughput was at 19.7% MMT with a capacity utilization of 113.9% in comparison to throughput of 19.4% MMT and a capacity utilization of 109.7% during Q3 of financial year '25/'26. Pipeline. During the year, Pipeline throughput reached a record 105.6 MMT, with capacity utilization of 73.7% vis-a-vis 100.5 MD during financial year '25, with capacity utilization of 71.7%. During the quarter, the capacity utilization was about 78.3%, with throughput of 27.7% MMT compared to 76.3% with throughput of 27.6% MMT in the immediate preceding quarter. Marketing. I'm pleased to share that Indian Oil has recorded highest ever total sales volume of 105.117 MMT, recording growth of about 5%. Financial year '25, that number was 100.29 MMT. During Q4 '25-'26. Sales volume of 27.343 MMT was achieved as compared to sale of 27.184 MMT in Q3 '25-'26. During '25-'26, 2,597 retail outlets were commissioned, taking the total number to 42,818. We have commissioned a record 909 retail outlets in D1 class market which is National Highways leading to positive market share. Our business achieved record sales of 905 TMT during the year, reflecting a 16% growth. Petrochemicals. For '25, '26 petrochemical reported highest ever sales of 3.396 MMT. Financial year '25, this figure was 3.236 MMT. For Q4 '25-'26 sale of 0.901 MMT was achieved as compared to 0.893 MMT in the preceding quarters. Gas. For '25, '26, total gas sales was 7,276 TMT, including CGD sales of 188 TMT vis-a-vis sale of 6,892 TMT, including CGD sale of 113 TMT for '24, '25. During the quarter, we registered gas sales of 1,814 TMT which includes CGD sale of 54 TMT as compared to total gas sale of 1,937 TMT, which includes CGD sales of 51 TMT during the preceding quarter. In my -- in a role development, Indian Oil commenced India's first ever export of liquefied national gas LNG by road to Nepal. Indian Oil has established cryogenic storage and regasification facilities Nepal, laying the foundation for the nation's industrial LNG ecosystem and promoting cleaner fuel adoption. Biofuels and renewable energy. We have achieved ethanol blending percentage of 19.97% on all India basis up to March 2026. Our wholly owned company, Terra Clean limited has achieved connectivity approvals of 2.6 gigawatt capacity on central transmission utility, and the state transmission utility. Project activities, including land aggregation, tenders for long-term attendance for long lead items like transformers end-to-end win tenders, et cetera, are in progress. The Terra Clean Limited -- through Terra Clean Limited, we are progressively exploring commercial and industrial customers across India for providing reliable green power through long-term power purchase agreements under the Group Captive work in excess mode. Indian Oil aims to develop 31 gigawatts of renewable energy by 2030. Hydrogen. The green hydrogen plant of 10 Kta at Panipat is expected to be completed by December 2027. Indian Oil is developing in-house green hydrogen ecosystem, which includes indigenous technology for generation of low-cost green hydrogen production. qualified Type 3 composite hydrogen storage cylinder for onboard hydrogen storage, which are lighter and cheaper than imported cylinders, range of hydrogen fuel cell applications across retail outlets, 2-wheelers, indigenously developed hydrogen-powered drones enabling enhanced endurance, mobile hydrogen refiller for hydrogen dispensing in remote locations. Notably, Indian Oil is the only company in the country dispensing hydrogen through our fuel stations at and center in and Gujarat refinery, Vadodara, and undertaking field trials on hydrogen fuel cell buses and viability study for Hyundai Nexon hydrogen fuel cell electric vehicle through 2-year real-world test. Under the National Green Hydrogen Mission policy, we have partnered with Tata Motors Limited to undertake trials on hydrogen fuel cell vessels across 4 major highway. We will also develop 2 new hydrogen dispensing stations along Mumbai, Pune and Jamshedpur Balasore corridors. CapEx, during April to March '26, the company incurred a total CapEx of INR 31,401 crores, encompassing investments across all verticals. The vested CapEx target for '26, '27 is INR 32,700 crores. These investments are aligned with our long-term strategic road map and National Energy priorities. The major refining petrochemical expansion project across Panipat,, Gujarat and Paradip are at advanced stages of execution and are targeted for completion during 2026. Sales-wise commissioning of process units, utilities and official and offsite facilities is being undertaken in a structured manner to enable progressive capacity buildup and integration. As you are aware that currently, we are working on 3 major expansion programs and refineries. Panipat refinery expansion is expected to be completed by December '26, by August '26 and Gujarat by November '26. Borrowings. With respect to the borrowing levels, the borrowing as on 31 March '26 has moderated by about INR 5,280 crores during the quarter, and about INR 23,798 crores during the year and was at INR 1,10,668 crores level. The reduction in the borrowing was mainly on account of higher profitability and working capital changes. As on 31st March '26, the company's gross debt-to-equity ratio stood at 0.54, reflecting a comfortable leverage profile. After adjusting for financial investments, the net debt-to-equity ratio further strengthens to 0.32, positioning us well to pursue growth opportunities, absorb market volatilities and maintain financial strength across cycles. With these words, I take a pause here and request Director of Finance for his further remarks.

Thank you, Nitin. I would like to extend my sincere appreciation to our investors and all stakeholders for their continued confidence and support. The progress achieved during the year underscores the dedication of our teams and the strength of our operating model. As we move forward, we remain focused on sustaining momentum, strengthening our core business and delivering consistent long-term value to our stakeholders. With that, I will end my briefing here. We would now be happy to take your questions. Over to you.

[Operator Instructions] Our first question comes from the line of Vivekanand from AMBIT Capital.

I have 2 questions. The first one is on Project SPRINT. Now that you have completed 1 year of this project, what is the progress that you want to share on this both on the CapEx and the OpEx front? And if you could quantify and help us understand how to track this in the context of the dislocation that has happened due to the war. That would be great. That's question one. The second one is on the CapEx priorities beyond the current expansion phase. I do understand that several of your refining expansion programs are nearly drawing to a close. So in terms of how you are looking at aligning yourself within national priorities in view of the recent turn of events. How should one think about the CapEx allocation for the next 3 years? And also any major projects that you want to call out? Thank you.

I will take the first question. As we have shared in the opening remarks, that the company has achieved the highest level sales in all the physical parameters, whether it is refining, whether it is marketing. So I think the SPRINT has given us the good outcomes, which is noticed in our results also. As far as the CapEx and OpEx is concerned, I would like to share that on overall basis, we have achieved measurable savings of approximately INR 2,200 crores during financial year '25, '26 on account of Project SPRINT. This INR 2,200 crores were saved on account of various initiatives like the reduction in retails and maintenance expenditure, our energy efficiency parameters and supply chain optimization. So many factors contributed to almost INR 2,200 crores. And for next year '26, '27, we are targeting savings of INR 2,500 crores from this initiative. As far as CapEx is concerned, this entire strategy was to continue our momentum to meet all our plan expenditure while simultaneously reducing our non-earning CapEx or what we maintenance CapEx. So I'm happy to share that all of our projects which have been planned are going in line with our management expectations. And we have also optimized our CapEx on the maintenance portfolio. Now coming to your second question, which was on the CapEx allocation going forward. See, Indian Oil is a very, very diversified company. We do investments in our refining, marketing, petrochemical, gas, renewables. And the company has a very robust capital allocation policy. To ensure that the momentum to take this company forward is maintained, while we continue to invest in our existing business, we are also investing into new and new businesses in renewable sector. And the exact numbers, I will be able to share through our corporate finance team.

Okay. So you are saying that the other expenses line item is where the takeout of the INR 2200 crores is likely to have happened, right? Is that understanding correct?

Two major years. It is by the nature of energy efficiency, which are not exactly coming in other expenses, it comes part of my operating margins. So everything, I would say 50-50, 50% would be coming in my other expenses or you would say, revenue expenditure side. And another INR 1,000 crores would be coming in my margin side.

Okay. Got it. Anuj, I appreciate the color on CapEx. Just a broad breakup, maybe percentage-wise in terms of the key heads like refining marketing petchem over the next 3 years. That will help. And if you have any number in mind at an aggregate level, even that will be very helpful.

I will be able to share my next year's CapEx. Next year, I'm going to spend almost INR 32,700 crores in the financial year '26-'27. And I can also share that these expenses, the broad bifurcation should be majorly in refining an existing pipeline setup. And major expenses are doing -- going to this segment and maybe INR 5,000 crores will be going to the renewable segment out of that.

Next question comes from the line of Sumeet Rohra from Smartsun Capital Private Limited.

So firstly, I mean, we're very well done on the financial performance of last financial year. So excellent performance from all of you. Sir, my question -- and sir, firstly, my question to you is now as an Indian citizen is that hats off to you guys are in a very challenging environment globe, countries are really not getting fuel. You all 3 have done a fantastic job. So great stuff on that. Now sir, my question to you would be now as an investor point of view. Is that -- what's the thought process you're seeing today on pricing? Because, sir, I mean, the only reason I check on this is because we are a very high-volume company and you have recoveries today like the way we have is obviously very alarming for us as investors, right? Because I mean today, for example, whatever losses we report in Q1, to recover that, we would need a couple of quarters. So as an investor, our financial metric could obviously come off for this financial year. So -- and today, the matter of fact is that we've seen a 90% -- 95 increase in fuel prices. So can we now think on the grounds that we could go back to the daily pricing regime, which was existing in the past. So if you can just share some thoughts of how you look at the situation as well because you've handled the supply side extremely well. But now how do you look at the pricing point of view? And are we looking to get pricing aligned to market prices in the very near term? It would be very nice to get your thoughts, sir.

See, Sumeet, you have already stated that today, the priority is to ensure the energy security to our citizens. And Indian Oil remains one of the company which has that responsibility, and we are trying our best to fulfill that. As we have stated in the beginning, we are trying to manage our entire supply chain and realign that in the most optimum way. Because of these disruptions, we have diversified our crude sourcing, LPG sourcing countries. We have changed our refinery diet. We have -- but at the end, we have ensured that the product is available at all retail outlets at all LPG distributors at all point of time. Now as far as the -- how to mitigate the situation is concerned, situation is very uncertain and unstable. We are working on a day-to-day basis to manage that crisis and the right decisions are being taken at appropriate levels to ensure that both energy security and the company's viability remains. As far as specific numbers are concerned, we have stated that we will not be able to give some specific forward-looking guidance as of now as we are in the midst of a quarter, which is going on, still we are on 19th of May. Things change every day. So -- but one thing is sure that we are monitoring the situation very closely and taking appropriate decisions.

Our next question comes from the line of Mayank Maheshwari from Morgan Stanley.

My first question was more related to the plans that you talked about around refining expansion. I think you have kind of highlighted by December of this year, you would be kind of starting pretty much most of the refineries now. Can you just give us a bit of an idea around where -- what is the status now for all the 3 refineries, where is the ramp-up stages? And can we expect full utilization rate of the 3 refineries by end of this year?

Yes. See, Panipat refinery, which is being expanded from 15 million metric tons to 25 MMTPA. See, the approved cost is around INR 38,000 crores. And out of that, we have already spent approximately INR 27,000 crores as on date. And we expect our completion to happen in December '26. The second one, Gujarat refinery, which is being expanded from 13.7 MMTPA to 18 MMTPA, the total cost -- expected cost is INR 19,000 crores, and we have already spent INR 13,500 crores as on date. And we also expect this to come in the similar time frame in November, December. And Barauni also, which is expected to -- we are expanding from 6 MMTP to 9 MMTPA. Our approved cost is INR 18,000 crores. And out of that, we have already spent INR 13,000 crores, and this is also expected to come near the same time frame. So you are correct to say that all the 3 refineries expansion are coming within the same time. And our teams are working day and night to achieve these commissioning dates.

And sir, when we talk about commissioning, we are basically saying that is when you will get your first crude in and then you kind of ramp up from there? Or is it like a ramp-up state we are talking about?

So it's the first crude in we take, and we start our operations on that date. And over the time...

About a year of stabilization from there?

Generally, we say 60% capacity should come in the first year and 80% next year and 100% in the third year.

Got it, sir. And I think the second question was more related to the question around the last quarter. Can you talk about a bit around what were your refining margins or whatever margins you want to kind of give us and to get a perspective to reflect on a quarter-on-quarter basis, how things have moved. Obviously, things are volatile. We completely understand that. And also, if you can just highlight how much was the impact in the month of March because of the situation that evolved around the conflict?

See, if you have seen our results, if you have seen our results, we have given a very categorically statement there for the benefit of our investors that in the end of February '26, conflict arose in Middle East region, leading to supply uncertainties and result in volatility in the price of crude oil and petroleum products in the international market. The profitability for the year '25-'26 was largely insulated from the impact of these developments due to inventory procured at normal prices before the conflict. So '25-'26 results have not got impacted to a major extent. Now coming to your first question of the refining margins. See, refining margins have been quite volatile and unstable during the -- particularly this quarter. Last year was quite stable for the full year. So -- but what we felt that Indian Oil is an integrated energy company and gross refining margins reflect only the performance of refinery segment. Therefore, using GRM alone as a benchmark of overall performance may not be -- give the correct picture to our investors. And now we are focusing that -- let us focus on EBITDA and PAT to see the overall performance of the company. This statement becomes much more important given the situation which is prevailing today in Q1, where the refining margins are extraordinarily high, but our marketing margins are intact. So that way, we are -- we have not disclosed our GRMs during this quarter in our financial results. I will also add to say that there is no standard practice methodology for calculating GRMs. And each company is having its own methodology. So that also added to the -- our decision that the PAT and EBITDA should be the better showcase of our performance.

Okay. We normally compare for each company like-to-like quarter-on-quarter, Y-o-Y, but okay. I get your point. And in terms of the CapEx, the last question I had was like you are still maintaining your guidance for spending around 50% of fiscal '27 CapEx on refining. Considering these 3 projects are kind of done, is there anything specific that this money would be spent on?

See, whenever the commissioning happens, the payments take some time. So there's a difference between the commissioning and physical progress and the payment cycles. So that is why the cash -- there would be a substantial cash outgo on account of these completed projects in the next -- in this financial year '27-'28.

So we should be seeing lower CapEx is on refining starting fiscal '28 is what you're kind of towards.

Yes, yes, yes.

Our next question comes from the line of Hardik from ICICI Bank.

As you mentioned that the GRM we are not disclosing, it is just for the quarter or going forward, this will be the policy? How is it?

See, till the time so much unstability and volatility remains, I think giving GRM would not be a correct way of disclosing our financial statements because at one point of time, you may find GRM is excessively high, which doesn't get reflected in my profitability. So till that time, we are making it a pause. But we -- again, we may consider once again once the situation normalizes.

Okay. Okay. And sir, may I know how is the LPG under recovery in April and May?

Yes, I can share with you. Just give me 1 minute.

And also, can you just highlight there has been a substantial increase in the operating cost. So if you can just help us the breakup or where the incremental cost has been there?

See, the underrecovery per cylinder was INR 100 in the quarter 4 of financial year '25-'26, which went high to INR 171 in April 2026, which has further increased to INR 670 in May 2026. LPG buffer position as on 31st March '26 is INR 23,102 crores. I would also like to share that LPG loss incurred during quarter 4 '25-'26 is INR 2,405 crores. And for full financial year '25-'26 is INR 9,211 which is without registering any subsidy, which is being received by the company.

On breakup of or why there is a substantial increase in operating costs, other expenditure?

Sir, you are talking about the. Give me one minute. Okay. I just -- I will give you this answer by the time I get this information. If you have any other question, or I will come back to you for this answer. But I can always share that the exchange loss was a major factor of this increase in the other expenses. As you know that the rupee depreciated by almost 9% during this financial year '25, '26. So the exchange losses have been the major contributor in the other expenses. But with specific information, I will be able to give you again.

Our next question comes from the line of Bineet Banka from Nomura.

Sir, regarding the refining margins, so do you think that the world is entering a refining super cycle and GRMs will average at a much higher level than what we have observed the number before the war. And this is especially true for Indian refineries where the output of diesel is much higher than, say, Singapore GRM and the cracks have been very high. So I'm asking this because much of the upside for IOCL will be coming from the refinery expansion. So 25% odd capacity is being added. So what is your view on the GRM going forward, maybe for FY '27-'28?

See, although I have said again and again that I will refrain from forward-looking statement, but yes, I have -- I can share that world is, definitely will be facing some cycles of higher refining margins going forward because whatever has happened, whether in Russia, Ukraine or in U.S., Iran, it has disrupted the refining and upstream assets also. So all in all, because of the various uncertainties, refining margins are expected to remain on the higher side until this geopolitical situation normalizes. And if you see for the past 5 years itself, refining margins have been quite high as compared to the refining margins, if you see the previous 5-year period. So yes, refining margins are expected to remain high in next 1 or 2 years because of these uncertainties.

Okay. And my second question is regarding after the increase in capacity for refining, will IOCL have surplus petrol and diesel production compared to the marketing volume? And what will be -- you will be exporting these volumes or selling to, say, other OMCs?

See, the kind of demand we are seeing in India, we feel that we may not have major exportable surplus on a sustained basis from our refining systems. But from season to season because India also faces a seasonal demand in the monsoon period, in the winters, in the summers. So from the seasonal point of view, yes, we would be exporting. But on a sustained basis, we don't anticipate major exports coming, except for a few products like maybe naphtha for some point of time or furnace oil, but not to a major extent, we see any exportable surplus.

Okay, sir. And the refinery throughput for FY '27, shall we assume it will be higher than FY '26 because the utilization has been around 108%? And assuming that there is some normalization there, and you will be adding some capacity towards the end of the year. So what should we think about throughput for the refinery?

See, I would not like to comment on the additional capacities, which will come on account of expansions. But from an existing refining setup, I expect similar refining throughput next year also because if you see this year has been one of the highest throughput. And current year, we are having a few shutdowns, planned shutdowns. So -- and a few shutdowns, which were planned this year will come back next year. So we are expecting that next year, we should be having almost 75 MMTPA of refining throughput on a stand-alone basis. If you add CPCL, that will be another 10. From Indian Oil, we would be having 75 MMTPA of refining throughput.

Our next question comes from the line of S. Ramesh, an individual investor.

So if you look at your Petroleum segment results, can you share what is the impact of the inventory accounting included in this petroleum segment result for the fourth quarter?

Actually, because of various factors, I would say that '25-'26 as a whole year was a very stable year for us. And as specific inventory numbers are concerned, I would like to refrain from the specific numbers as on date. But if you want, you can get in touch with my corporate finance team to help you out on this.

Okay. So on the petrochemical segment and the gas segment, can you share some thoughts on what are the drivers for the petrochemical turnaround? Is it due to inventory gains? Or is there a sustainable improvement in the spread? And do you expect this trend to sustain? And on the gas segment, what has resulted in the loss? Is it from your LNG business or in the stand-alone CGT? And how do you expect the gas business to shape up over the next 1, 2 years in terms of the profitability?

See, I have shared that we had the highest petrochemical sales during the year financial year '25-'26. And if you see the fourth quarter was very good for the petrochemical segment. So that was the additional margins what we heard in the Q4 in petchem. But as far as gas is concerned, gas prices remained on elevated levels and that has impacted the quantity of sales and to the margins to some extent. So we are also watching the situation on gas front, how it will turn out because of this now geopolitical situation, the gas prices have gone up significantly. So it's a situation we are monitoring, and let's see how the gas volumes take shape in the current financial year. As far as petrochemicals are concerned, we expect to continue have a higher sales volume and also give reasonable good returns from this business segment.

Sir, just one more follow-up question on the gas segment. So in terms of the progress on the stand-alone city gas distribution network, what is the kind of ramp-up you expect this year? And when do you see the CGD business turning profitable? Because just to understand if the entire loss is on the LNG trading? Or is there some loss on the stand-alone CGD stations which are commercialized, which you expect to eventually make it profitable? So how do you see the stand-alone CGD business shaping up in the next 1, 2 years?

See, as far as CGD business is concerned, we are having an EBITDA positive in '25-'26 Q1 itself, and we have become PBT positive by the end of the financial year '25- '26. So as far as CGD business is concerned, it is not a net positive contributor in my P&L. And going forward, we expect our volumes to go up in next financial year from this segment as well.

In terms of the gas supply chain for the CGD business, apart from the gas and the APM gas, are you able to source enough LNG for the kind of ramp-up of plans for the stand-alone CGDs? And how are you managing the supply chain for the natural gas there for the CGD business?

See, there is no constraints in the availability of gas as such. It is only the pricing issues actually. So you have to -- whenever it's more of a decision whether you will be able to pass on this higher gas to your customers or your internal system. So based on various factors, we are definitely -- but as the CGD business is going up, volumes are going up, as I've shown to you that it is a PBT positive for me now from '25-'26, Q4 onwards. And going forward also, we expect that we -- and I will also share with you that we -- many of the suppliers declared force majeure due to closure of Strait of Hormuz. So that affected our business, but we also diversified our spot procurement from Indonesia, Nigeria, Angola, Oman. So we have now diversified our import sources also. All in all, I will just say that it's a pricing issue, not a supply constraint.

Our next question comes from the line of Ajit Darda from Nizar Securities.

Am I audible?

Yes.

Sir, my question is around the proposed JV between SCI and oil PSUs. So in light of the current energy security concerns, when this JV is expected to be finalized and operational, sir?

See, the AGs of Thermo PNG Minister of Shipping, a nonbinding MOU was signed between the Oil CPSEs and Shipping Corporation of India for formulation of a joint venture company for ownership and maintenance of vessels with focus that some of them should be built in India. Indian Oil is exploring to purchase 4 MR vessels to start with. It is established that the CPSEs have complementary capabilities and jointly acquire and manage the operation of vessels and thereby exercise better control on the petroleum supply chain. The companies, whether it is both Oil PSUs and SCI have agreed in principle to work together and collaborate on acquisition and operation of vessels on mutually beneficiary basis. The JV formulation structure is known to everybody. So over to you.

And sir, with vessel acquisitions happening at peak of the cycles, what minimum benchmarks or ROCE is targeted by this JV? I mean...

Today, I will not be able to give you the exact numbers, but these issues are being discussed between the companies and the SCI. And we will arrive at a very -- due diligence is going on as on date, I can say.

And sir, will that JV be a nodal agency going forward for the oil PSUs or it will be still on competitive basis for other players as well?

All these things are under discussion as on date.

Our next question comes from the line of Akshay Ajmera, an individual investor.

Just following up to the earlier participant's question, how will we ensure, sir, in this shipping business because it's a very cyclical business. So how will we ensure profitability of the JV because there are up cycle, there are abnormally high rate cycles, and it's a very long CapEx-intensive business. So how will we ensure that there are no losses in the JV?

As I said, all these issues are under deliberation. But I can just share with you that Indian Oil is an end user of the shipping business what we are talking about. And we are in a continuous business for the past more than 5 to 6 decades, and this is going to continue. So any arrangement which gives me the shipping security will be beneficial to the company and which is very much evident over -- in the past 2 years that whichever company had a very strong shipping connection, it made best use of that during this crisis.

That was really helpful, sir. Sir, at present, what is the estimated annual spend by us on shipping freight charges? And what percentage we are expecting that it will go through the proposed JV?

These numbers will be able to -- I will tell the corporate finance team to give it to you through the coordinated piece. I don't have the ready numbers with me.

No problem, sir. And it will be primarily a very long-term arrangement, 5, 10, 15 years?

Yes, yes. It is going to be a long-term joint venture company because the shipping business is a long gestation period.

What is the expected time line, sir? When are we expecting this to be operationalized?

Things are under discussion and the due diligence is going on. So we are quite focused on this joint venture company.

Our next question comes from the line of Vikash Jain from CLSA.

Anuj ji, if you could also give a sense of the ramp-up of these reasonably large capacities which are coming in the sense of not just throughput, but also the upgraded units by when do you think they will get to full utilization? Should we assume that everything to get at full utilization will be 3, 4 quarters from the time they start, so maybe more like towards the end of 2027 is when all of these units will be fully stabilized?

Actually, as you know that Indian Oil is already managing 10 refineries, have handled refinery expansions in the past. As a thumb rule in our company, we say the first year, we will achieve 60%. Next year, 80% minimum. And by the end of -- by the third year, we achieved 100%. Percentages can go a little bit here and there. But on a broad basis, this is what we have seen in the past. And this is how we make our profitability metrics also when we take management approvals on any expansion. And all these are brownfield expansions, and they're expected to take a lesser turnaround time. So this 60, 80, 100 is on the outer scale, we expect it to turn around much faster.

So FY '29 should be the number, should be the time when we should have more or less, hopefully, given that these are brownfield more or less...

I can't give a specific year, but I would definitely say that being a brownfield expansion, we expect them to come on board very quickly.

Next question comes from the line of Dhvaneet with Savla Family Office.

I have only one question. I heard previously that you were saying that the pricing is an issue on the gas side, not the supply. Does it apply to the supply of petroleum products as well? And till what time are we confident about this situation? So we are like 30 days, 40 days, 50 days of stock with us? Or is there some point where we might actually not be able to supply the petrol diesel at the pumps? And in terms of pricing, I know you cannot elaborate much on it, but is it fair to say that since the oil price of oil has gone up by like 50% or it's doubled, then probably the pump prices should also double for us to be able to breakeven?

I will reply to your first question first. See, as far as the supply of crude oil and other petroleum products are concerned, we saw -- we have consistently seen that particularly crude oil, there are very diversified sources are available and all our refineries are operating on a full capacity since the crisis have started. So we are making the crude oil available. Other LPG, yes, LPG had a constraint, but we have managed to diversify our sources of LPG and reasonable good quantity of LPG has been made available. And that is why if you see constant supply availability of LPG is being ensured pan-India basis from all our distribution channels. Now coming to your second question about the inventory levels, we don't have any shortage of either crude oil and LPG. But yes, crude oil number of days inventory is still being maintained for over a month. LPG inventory has come down, but still it is being managed so that we have enough LPG availability pan-India. Now coming to your third question about the pricing, as I have said that the situation continues to be very uncertain and unstable. We are monitoring the situation and appropriate decisions are being taken at appropriate level to mitigate the situation.

Sir, I know you can't -- I agree with your statement on pricing. What I was trying to understand is, is my assumption correct when we say that if the price of crude has moved up by 100 -- by $50 or double, then probably for us to be able to make a decent margin, the price at the pump should also go up by that same quantum? Or is there a lot more calculation which goes within it?

See, it depends upon a number of the factors. prevailing in the country, outside the country. And as I said many number of times, we will not be able to give any specific guidance on this matter.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to you.

Thank you all for your time and insightful questions. On behalf of the entire India Oil team, I deeply appreciate your continued trust, confidence and support. We value our engagement and look forward to future interactions and keeping you updated on our progress. Stay safe and take care. Jai Hind.

Thank you so much, sir. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.