Oil and Natural Gas Corporation Limited (ONGC) Earnings Call Transcript & Summary

[Audio Gap] that you have. Amidst the challenging economic conditions and business environment, let me inform that ONGC has given another stellar performance with its highest ever stand-alone PBT of INR 50,395 crores and PAT of INR 38,829 crores, one of the highest amongst CPSEs in India. This would have been even higher, but we reviewed the disputed sales tax and GST on royalty and made a provision of INR 12,107 crores during quarter 4 of financial year '23. Notwithstanding that we continue to pursue our legal recourse for this disputed amount and we are confident about the merits of our stand on the issue. In spite of this, we continue to remain one of the highest dividend paying companies of the country with its highest-ever dividend of 225%. That is INR 11.25 per share and total amount to INR 14,153 crores for the financial year '23. We are well poised to consolidate from here and grow on a sustainable path meeting the increasing energy needs of the nation and in the process at creating value for all of our stakeholders. The suggestions and ideas that we receive from you always motivate us to strive for excellence, and we look forward to have a great interactive session. With these words, may I request our respected Chairman and CEO, ONGC Group, Shri Arun Kumar Singhji, to share with you his assessment of the last year's performance and his perspective on some of the emerging issues of the industry. Thank you very much.

Thank you. Thank you, Pomilaji. Good evening. This good evening is on behalf of ONGC Group of companies, including ONGC, and also our esteemed colleagues, ladies and gentlemen, all the analysts, all the finance fraternity people who really matter a lot to us. So good evening to all of you. Before I start to the context is that you know that we have had a result announcement and P&L announcement last Friday, and that's how we are here. This is also an opportunity to explain you the prospects of the company -- country, because without country context, we can't come to company context. First and foremost, as you know, Indian story is taking very greatly on demographics, utilization and now decarbonization and also partly deglobalization. So all 4 are giving strong tailwind. So it may be here and there some dips, but long-term story of our country is great, highest than ever. In that context, as you know, the energy demand of our country because our per capita energy demand is still far below the international average. So energy demand of country will keep growing massively more than in any sector because more the growth, more the need for mobility. And more the need for mobility and industry, more the need for energy. So now unlike rest of the world, our story is different because at least for 20, 25 years, fossil fuel story is going to remain robust. But at the same time, it is also an opportunity to steamroll or everything that we need to do for taking our energy transition also seriously. So it is both the world simultaneously running high. But after some time, 20, 25 years, maybe it is that others will start crossing the path and something will take north bound and maybe fossil fuel, but it will not happen before -- in my calculation, not before '42, '43. So in this context, ONGC is here, and ONGC, first and foremost, we will give you fiscal and then financial. ONGC typically produces -- if you take around a share in the JV production in country around 43 million ton of oil plus oil equivalent gas. Last year -- normally, it was 55 million, but last year, why 55 million? Because 43-plus million OVL gets around 12 average. But last year, Russia had a problem, and therefore, OVL production went down. But fortunately back to 4Q, Russia is back at the same numbers of production that is. So ONGC, if you add, OVL production of 13 million tons. So say normally, then it is 55 million tons. And we believe that this, by and large, is the picture barring plus minus little here and there. Last year's oil, we held ground at least we are at a straight decline. Gas, we little went down. So physical side, it is -- if you stay 45-plus million, 15 million -- ONGC, I assume that it will grow 3 million, 4 million tons more because of the things that is immediately on -- you can see that immediate thing in [ our thing ]. And at least, we expect OVL to be 15 million tons with Mozambique. So it is 60 million tons. Country consumes roughly 280 million tons of oil plus oil equivalent gas. So basically, it becomes 23%, 24% of country, is still far from satisfactory because -- and for that, as you may be aware, the next most important thing for physical performance is what happens in exploration side. Exploration side, as you are aware, that government released last year, 1 million square kilometers of additional sedimentary basin area on Category 2 and Category 3 for further exploration, which was out of bounds. We believe very strongly that, that offers good potential for our country. And ONGC aims to do at least out of 1 million, 0.5 million square kilometer ONGC wants to do themselves. So if that comes, then naturally, our energy security and also Atmanirbhar thing takes shape -- better shape. So in this context, you may be aware that government has announced multiple royalty rounds. Now hopefully, these rounds will -- every year will be something at least a lakh square kilometer ONGC intends to add. Now coming back to last year performance of exploration. We had 8 discoveries. And out of that, some have been already monetized. Some are yet to be monetized. And reserve replacement ratio is more than 1 -- just above 1, 17th year in row. So that is something it means and it's just making up for what is being produced. So reserve is not growing as robust as we would expect as the country to grow for the simple reason that our exploratory efforts, because of restriction, was not great. Now that restriction has opened, and hopefully, in 2, 3 years, we should scan the area, we should survey the area and we should be in place. Now one more thing we wanted to share with you that around INR 10,000 crores per year we are spending average. This last year, we have spent INR 10,000 crores on exploration. So if we keep expanding INR 10,000 crores, so in 3 years -- next 3 years, we will be spending around INR 30,000 crores in exploration. Now coming back to the per capita consumption story. I told you that we have a very strong piece. Now one, what is the good news for ONGC that just I wanted to share with you? Unlike all previous years when gas prices ONGC live with even gas price of $1.79 per MMBtu. And now at least assuming that oil price remains at 75, government has capped -- the policy has capped, the ONGC nominal filled gas to 6.5. But any gas, which is produced from any new well, that will get 10% of crude price -- prevailing price, plus 20%. So effectively, it becomes 12% of crude price. So every year, ONGC roughly 6% to 8% of production falls. And that production is replaced by new wells. The 6% to 8%, if ONGC every year new production comes, that will fetch at current crude price $9 per MMBtu. So year-on-year, from here, every year, ONGC increases its revenue if it maintains 8% of production from new wells. A fantastic price, $9, nowhere in the world people look at. So in a way, gas pricing over the next 7, 8 years will get completely reformed and maybe calibrated permanently to 12% of the crude price. This story is the biggest story for ONGC in years to come. This year, it has started. Now in this year, we'll get 6.5%. Next year, we will get 8%. If you add, then weighted average, you can calculate that how much it will become. And every year, this increase will happen. And after that, INR 0.25 per MMBtu will get added after 2 years in 6.5%. So that you'll leave aside because that will also give a base effect. So what I'm trying to say, that ONGC financial performance is almost assured, unless something -- but only thing is whenever in this world, you use something assured, you have to always be assured. Unfortunately, it is a [indiscernible]. So unless some disruption, because in our industry, uncertainty is very certain. So anything that you say, you have to always assure and say. But this is a story that everybody should take, that unlike previous ONGC, now ONGC is almost getting gas price 4, 5 years equal to international 12% of oil price. And oil price in any case is deregulated. So oil price in India, you get basically international price. The financial side wise, not much of an issue because it is almost looks assured if this policy regime continues, which I should -- I think it should. Now coming back to financial numbers last year, we must explain to you -- because last year, there is a dip in profit in last year over our performance. But last year, we were INR 40,000 crores, 40,000-plus. This year, around 3,800 crores. So around we have this -- there's a dip impact. But this dip impact, in fact, is not because of ONGC. If you see last year profit of INR 40,000 crores, INR 8,000 crores was the gain out of tax change. Because INR 8,000 crores we gained out of because tax regime minimum or max regime [indiscernible] regime of 25%. And then whatever the line in our books that we came here. So actual profit last year, barring tax addition, was only -- was INR 32,000 crores. This year, contrary to that, if you knock out this year, we have provided for INR 12,000 crores, of course, at level INR 9,000 crores. INR 9,000 crores PAT got wiped out because we took a view that we should provide for the GST on royalty. All of you may be knowing that royalty is a tax, which gets paid to state government or central government as the case may be. And GST on royalty is tax on tax. Tax on tax is something that is a taboo in taxation world. But somehow, it -- the demand has been persisting for 5, 6 years and many people went to court. And now the matter is before a 9-judge bench of Supreme Court to whether tax on tax can be levied. Matter being -- becoming big because last year, this liability became INR 3,000 crores because oil and gas prices were all-time high. Then we started getting worried that it is too big amount to take a hit if something untoward happens and legal matters [indiscernible] it can go either way. So we took a conservative view as happens in the best governed organization that will provide for that. The INR 12,000 crores on the pre-PBT level, we took as provision. As a result, INR 9,000 crores PAT got wiped out because of this provisioning. It is not something that there is a fair degree of chance to -- for this money to come back. But we can't say that with certainty, and therefore, we provide [indiscernible]. Now if you add INR 9,000 crores tax neutral, it will become INR 47,000 crores. So last year, INR 32,000. This year, INR 47,000. So it is basically a 50% increase in profit. So it has to be understood in the context of ONGC, if you leave taxation. I'm not talking about SAED. SAED is a physical tax, which government levied, which is not accounted for it. So if you -- our conservatism, and last year, the windfall coming out of the taxation regime change is the net differences. If you knock out both sides, ONGC performance is 51% better than previous year performance. Of course, you can say that ONGC performance is dedicated on the best crude and gas price. But that is the business we are in. Price loss or gain belongs to us. That is -- that doesn't go anywhere else. So -- but that happens in any industry for that matter, cement, steel or anybody. So this, I wanted to tell you that our consol level, somebody can argue that at a consolidated level, our PAT is really down. Primary reason of that is HPC. HPC last year made INR 6,000 crores, INR 7,000 crores. This year, we lost INR 6,000 crores. The net difference we can do is INR 15,000 crores. So INR 14,000 crores, if you understand, and INR 1,000 crores, INR 2,000 crores of small companies, it explains that -- why PAT at consolidated level went up. But don't forget that this year, HPC will make more money because of the way things are moving. So this seesaw game continues. And therefore, at least consol level, we have a grand future at least for '23, '24, because they're one of the biggest subsidiary whose profit will get accounted under our head when we do consolidation of accounts. So that is something that we should -- I'm saying -- I'm not saying what will happen, but first quarter of this year looks very robust for ONGC. So that is the basis of I'm saying that. Now coming to net zero. Net zero, our country has announced net zero by 2070. But here this morning in press conference, I announced that ONGC will achieve net zero Scope 1 and Scope 2. I'm repeating, again, there is chance of [ misspoking ], so therefore I'm repeating. Net zero Scope 1 and Scope 2 put together, not separately, by 2038. So ONGC's plans, blueprints are ready. We are moving in that direction. And therefore, the moment we've got confidence that -- it looks like that -- it is great that we can do it. That's how today we announced that we are set on a path to become net zero Scope 1 and Scope 2 by 2038, means 15 years from now. But majority of the things will get achieved in the next 7 years. And therefore, that is something that we thought that we'll explain to you. Now coming back to the efficiency. In fact, 3, 4 things in net zero, which is very material to us, is basically 3 sites. Basically, the energy production, then energy storage, and then you have -- so energy storage, we have battery and nonbattery both. Battery OEC is doing. Should it -- and parallelly, we are trying for a nonbattery solution, primarily which is very capital intense. And anything that is capital intense, ONGC loves because what is left is -- because the company basically ties with the capital intense business. So now coming to -- this is what we wanted to share with you. Now we'll be too happy to take some questions if we have. But green side, 2, 3 more things we wanted to tell you for future of the company. Oil and gas, I told you. Basically Mozambique for OVL. For ONGC, 98/2, that is KG. Our best case scenario is August oil production. Worst case scenario is October. It all depends on the way nature and monsoon works. And in this, oil production should commence, and then gradually, it will step up. And gas side, we are hopeful in end of the FY '23. So this is what the future is. Of course, we need around INR 30,000 crores CapEx per year. 4 major buckets of CapEx that ONGC spends on. First bucket, of course, this year also will be 98/2 because some of the major expenditure has happened already, but some of it will happen this year. That is FY '24. And second part is our Western Offshore, where we continue to pump money CapEx to retain the production. Because as you are aware, it is an aging field. So CapEx intensity needs to be strong. So that is second bucket. Third bucket, of course, we have some projects in pipeline for green solutions. And besides offshore, we also have onshore assets, which produces around 6 million, 6.5 million tons of oil, primarily spread between Gujarat, Northeast and Andhra Pradesh. So these areas, we need to have CapEx intensity to marginally improve production or retain production. So this is what -- this is the contour of ONGC. Then last part is renewable. This year, renewable will be less. But next year, renewable and petrochemicals is doing much bigger because renewable first will take shape for the [indiscernible] money only next year. So activity, what we take -- effort we take out, the result should start coming from next year. So this is what it is in macro [ 5 6 ] piece. Very few of -- many of you may be knowing that ONGC has a very strong group level, very strong presence. Very few people know that MRPL, which is subsidiary of ONGC, produces good amount of petchem, and it has only cracker in Southern India, at least all the capacity to do petchem. If you add that with OPaL, OPaL is also around 1, 1.5. So 3 million ton of petchem is [ about a month ]. We have aspiration because -- 2 reasons for petchem aspiration. One is that should transition become faster, then we need to take care of our group. And for that to plan, petchem helps us in containing Scope 3. Because petrochemical group becomes converted into groups. So naturally, it doesn't go anywhere. So petchem -- an Indian petchem consumption per capita is very low, which is bound to increase year-on-year much faster than fossil fuel. So if that be the case, so petchem is one of the aspiration we have. And hopefully, we have -- we told this morning that we will expand petchem at MRPL because there is a land acquired already for this purpose. So -- and then we are also looking at some opportunities to improve our oil to chemical footprint. But as a matter of, again, summarizing the same, if you see ONGC, we primarily have threefold good stories, gas, gas, gas. Second story is oil. Third story is exploration in the 1 million square kilometer of additional area. In -- this is a conventional E&P space, then a new space, green and petchem. So two things that we want to pursue very strong. But prosperity to say that we were responsible. Thank you.

Thank you, Chairman and CEO, sir, for providing us with a comprehensive overview and valuable insights into the ONGC Group and also clearing the concerns in the mind of investors, especially regarding this GST on royalty. As mentioned earlier also, the U field, a part of the KG-DWN-98/2 plus 2 projects stands as ONGC's deepest gas discovery. We are excited to begin oil production from the Bay of Bengal, contributing to India's domestic oil and gas production. ONGC's recent discoveries in OLP blocks, such as the MB-OSHP-2018/2 block further demonstrate our commitment to unlocking India's hydrocarbon resources and supporting the national self-reliance mission. In light of these achievements, we would like to present an audio/visual showcasing ONGC's exploration and production efforts. Maybe proceed with it, please. [Presentation]

Thank you. I would like to extend an invitation to Mr. K.C. Ramesh, Executive Director, Chief Corporate Finance and Corporate Accounts, to present the performance of the ONGC Group. Please take note that the presentation and corporate brochure can be downloaded by scanning the QR code provided at the stand just at the tagging area.

Thank you, Prakash. After the introductory speech by Director Finance, setting the tone for this meeting and the encapsulating and inviting speech by our Chairman, time for me to give a small presentation on the highlights, financial as well as physical or the -- I mean the stand-alone as well as the consolidated performance of the company. A small disclaimer. Because the presentation is futuristic, so the normal standard disclaimer. The presentation would be in the following format. There are 5 parts to it. Stand-alone performance, then consolidated performance, growth pursuits of the company, what we do as a responsible operate, and then we go to subsidiaries and the joint ventures performance. ONGC setting new standards. ONGC is amongst the top CPSEs in terms of market cap with the INR 2 lakh crores of market cap. Among the top CPSEs is in terms of PBT and PAT, PBT of INR 50,395 crores, PAT of INR 38,829 crores, 25% of the total net worth of all the Maharatnas CPSEs. We have 3 women directors, most gender-diversified Maharatnas Board, with Director of Finance, Director of Exploration and 1 director -- Independent Director in the Board. We are also a leader in average spend of about INR 500 crores per year in the last 5 years in CSR. ONGC has been a well creator during the last many years. Government of India promoted ONGC with an equity of INR 342 crores over 22 years. But ONGC has been contributing handsomely to the government to the exchequer over a period of -- I mean an amount of INR 12,003,572 crore to government until 31st March 2023. By way of distinguishment, about INR 48,000 crores, dividend payment of INR 114,625 crores. Contribution to exchequer to the state as well as the center. To the center, INR 531,888 crores. For the state, INR 198,949 crores. And subsidy -- by way of subsidy also INR 310,116 crores. This contribution during '22, '23 was the direction of INR 72,602 crores; center, INR 54,900 crores; and state, INR 17,695 crores. Coming to the FY '23 highlights. In exploration, we notified 8 new discoveries, monetized 3 discoveries. Accelerated exploration by way of -- we had -- we bagged 85% of the blocks in OLP around 6 and 7 with a square kilometer of 43,495 -- 43,494. We also drilled 461 wells during the year, 85 of which was exploratory and 376 development values. On the production front, O+OEG production was 42.836 MMTOE. That production was 2.5 MMT. Projects, we had 5 major projects completed INR 8,600 crores, with usage gain of 8.7 MMTOE. 3 projects were approved during the year, INR 5,880 crores. Going beyond E&P, exploring low carbon and green ammonia plant facilities are also in the pipeline. This is the physical performance. On Santhal oil and gas production basis, ONGC had a production of O+OEG of 40.21. The JV part was 2.62. So totaling stand-alone per JV, 42.84 during the FY '23 as compared to 43.39 during the last year. Value-added products was 2.597 as against 3.089 in the last year. The physical performance in terms of 2P reserves was -- 2P reserves, we have 716 MMTOE as compared to 710 last year. Number of wells, as I said earlier also, we drilled 461 wells during the current year as compared to 434 last year. Coming to stand-alone financial performance. Our gross revenue from operation was INR 155,517 crores in FY '23 as compared to INR 110,345 crores in the last year. The PAT was INR 38,829 crores as compared to INR 40,306 crores last year. EPS of INR 30.86 in FY '23 as compared to INR 32.04 in the last year. The dividend payment per share was 11.25 in FY '23 as compared to 10.50 last year. Year-on-year, normalized fact. This is 1 aspect which our Chairman are also in his speech explained in detail. In fact, these are the numbers which reflect what he spoke during his address. FY '22, '23, though the PAT appears to be lesser than last year, it is, in fact, INR 1,477 crores, less at INR 38,829 crores as compared to INR 40,306 crores last year. The reason being that there was an impact of provision on GST and service tax in GST on royalty. The impact was INR 8,477 crores. So the normalized PAT for '22, '23, in fact, would be INR 47,306 crores as against the normalized PAT of FY '21/'22 drive like this. INR 40,306 was the PAT less deferred tax adjustment because of the new tax regime we went into last year. There was a credit of INR 8,953 crores. So the normalized PAT for the last year would be INR 31,353 crores. So increase in normalized PAT of INR 15,953 crores as against -- I mean which consists of 51% increase. So to put things in perspective, though the numbers look less in the current year, actually, there's an increase of 51,000 -- 51% in the last -- compared to last year. Coming to the CapEx. Core CapEx in the last 5 years was a tune of INR 144,000 crores. The CapEx for the last year certificate here. What we plan for the next year is INR 30,125 crores, of which the exploratory efforts is 21% here, plus 10% on service, so 31%. 39% is the -- relating to capital projects and 27% relating to the development drilling. So we are more or less in the same level as far as the CapEx is concerned. Coming to the discovered -- I mean discoveries of ONGC. ONGC discovered 8 out of 9 basins of India. The last one being Vindhyan Basin. The first part of my presentation on stand-alone is completed. Now I'm coming to the second part, the consolidated performance. ONGC Group, as we all know, is into -- it's an integrated energy company, totally integrated, expanding footprints in energy business. We are in upstream, we are in midstream, refinery, petchem, value-added products, LNG, power, renewables, services and others. The consolidated turnover for the year was INR 684,829 crores. ONGC Group resilient performance in FY '23 with 1,221 MMT of 2P reserves, 53 MMT of oil and gas production, 36.23 MMT of refinery throughput. The financials in terms of revenue from operations INR 684,829 crores and profit after tax of INR 32,778 crores. Resilient consolidated performance is again reflected in this table. The total income is INR 698,903 crores as compared to INR 539,230 crores last year. EBITDA is also -- EBITDA is slightly lower at the consolidated level. PAT is also lower. The debt is slightly more compared to last year because of more borrowings by HPCL. Total equity of INR 301,255 crores will be there against a capital of INR 430,440 crores, which was to 30.01% debt on total capital. Debt to EBITDA is 1.5x and debt equity of 0.43. Yes, the debt equity chart is shown here. Current year is 0.43 as compared to 0.38 last year. We have very strong credit ratings also, domestic as well as international. The long-term domestic is from most of the agencies -- all of the agencies, in fact, is AAA. Short term is A1+ from all the agencies. International, also, we have very good ratings. They are all linked to the sovereign ratings scale. I'm coming to the third part of my presentation, which is the growth pursuits for the company. Looking forward, ONGC is planning to into oil to chemical. We are already a truly integrated oil and gas company with 1:1:1 in terms of crude production, refining and marketing. The financials are looking upward, which Chairman sir also, in fact, covered in his speech about the position that we are in with respect to the gas price as a result of the Committee recommendation and what we are going to get in the future. On the exploration front, we are into 2 basis and we are also going to areas. Production, we have planned to the crude oil production trend, which will come in the next slides. 0, oil to chemical petchem diversification is also planned. And green energy, net zero for Scope 1 and Scope 2 by 2038. This is the exploration growth, which is planned from 2020 -- the current position to 2025, '26. We are planning increase in acreage survey as well as the CapEx spend on exploratory growth. We targeted is 1,500 MMTOE. The production chart is shown here. As you can see, from 2022, '23, we are planning to up our production by 11.6% from 40.220 to 44.884. And overall, a target of 49.554 by 2025, '26. We are also planning gain through efforts, 26 MMT by 2040 through lower salinity water flood, Western Offshore. We have some plans for GAGD in Assam and polymer in Bechraji Major projects, CapEx of INR 61,200 crores, life cycle gain of 94 MMTOE. These are the projects under implementation, 23 major projects of $1 billion and above as planned, which is under implementation. 14 development and 9 infrastructure projects, investment of INR 61,200 crores and the end stage life cycle of 94 MMTOE. The projects which are planned -- which are also in the pipeline, they are shown on the right side. With respect to energy transition and green energy, where we are today is 189 megawatts. We are planning -- we have a goal by 2030 of 10 gigawatts, CapEx of INR 1 lakh crores. The plan is 5 gigawatts in Rajasthan. MoU has already signed by been scouted. Apart from that, also wind plus 1 of the ammonia is also planned. Coming to the global outreach. We have strategic collaboration with international oil companies offering the low opportunities, 23 big area of resources in Category 1 basin, deepwater exploration and production; Category 2 and 3, less explored basin awaiting and billing submission and bidding under OLP. The collaborations are presently at various stages of execution. New areas of collaboration and partnership. In the E&P front, we have collaboration with Exxon Mobil, Chevron, Total Energy, shell, SA Exploration and UT Austin. On the operations front with services, we have Schlumberger, Halliburton, Beicip Franlab, GCA and PwC. Going beyond oil and gas, we have coloration with Equnior, Shell and GreenKo. And on the technology front, we have -- for artificial indigent and machine language, we have S4 HANA and DCoE. Coming to the fourth part of my presentation. As a responsible corporate on the related to the ESG practices, on the environment front, we have committed for -- we are committed for conserving climate with regular genhouse gas inventory accounting and disclosures on Scope 1 and Scope 2 emissions. We have already implemented 15 claim development mechanism, CDM, projects, 2.2 million certified emission reductions with OTPC having emission reduction potential of 16 lakh ton CEO per annum. Fresh water conservation is also planned projects on that and other projects on renewable energy ESG ongoing activities. renewable energy-based power and other ESG projects such as solar, wind, solar parks, EV value chain, green hydrogen, storage, et cetera. Global methane initiative carbon capture, also wind project, dynamic gas blending, microturbine for power generation, geothermal et cetera. ESG social, what we have? We are committed to social welfare and inclusion. One of the first companies -- ONGC is one of the first companies to separate CSR -- to have separate CSR guidelines in 2009. CSR activity is aligned with needs of community in respective geographies. Activities in areas of health care, education, environment -- women empowerment, heritage The average CSR expenditure, which I covered earlier, also is INR 500 crores at the year. On the governance front, we are the first signatory in India to be integrated back, focused on overall organized practices, awareness solution and monitoring, strong effective vessel blower mechanism also we have. Coming to the fifth part of my presentation relating to the subsidiaries and JVs of the company of the group. ONGC Videsh on the -- has a global footprint in -- we have -- we have 32 projects in 15 countries, of which 14 are producing. Discovered and developing are 4, exploration 11 and pipeline projects are 3. The highlights of ONGC Videsh, CPO 5, significant operated exploration success. We had contributing 19 KBD and on the way to 25 KBD. Mozambique, the situation is improving, and we are on to the assumption. Secondly, we are reclaiming the rights and bounce back from 0 to transiting from exploration success to development, and we have extensions in Block 06.1 Vietnam, Blocks B-2 and EP-3 in Myanmar. SA 04 and 09 Bangladesh. It's also done -- the floods impacted the dip to 27 KBD. We are focused -- we have a focused approach and innovative solutions to regain 54 KBD. So OVL in sort is 4.5 [ MMT ] operated flowing barrels from 6 projects in 4 countries, total 32 projects in 15 countries. The performance of ONGC Videsh, 2P reserves, 485 MMtoe as compared to 495 last year. Because of the geopolitical situation, the oil and gas production has come down this year 10.17 as compared to 12.32 last year. Turnover of INR 11,676 crores, that's compared to INR 17,322 crores last year. And the PAT has gone up to INR 1,700 crores as compared to INR 1,589 crores last year. The MRPL highlights. MRPL achieved highest ever throughput of 17.14 MMT in FY '23; registered GRM of USD 9.88 per barrel in FY '23; achieved revenue of INR 1,24,736 crores during FY '23; added 31 retail outlets, making total retail outlet to 63. Continuing the MRPL performance. The throughput was 17.14 in FY '23 as compared to 15.05. As we can see, there is an increasing trend in all these aspects, including GRM, gross sales. The PAT has come down to INR 2,638 crore in FY '23 as compared to INR 2,955 crore last year. HPCL. HPCL is a company with 21,186 retail outlets. They are the #1 lube marketer and #2 in LPG market of India. HPCL achieved the highest ever combined refining throughput of 19.09 million metric tons during the year, achieved highest ever sales volume of 43.45 MMT. And HPCL also commissioned 697-kilometer long Vijayawada-Dharmapuri pipeline; also commissioned 1,161 new retail outlets, crossed the milestone of 21,000 outlets during the year. HPCL had a throughput of 19.09 MMT as compared to 13.97 last year. The GRM improved to $12.09 from $7.19 last year. Revenue from operations was INR 4,66,192 crores as compared INR 3,73,897 crores last year. HPCL, as we all know, because of the position they had in the first and second quarter, the prices that they got was capped, so because of which they ended up with a loss of INR 8,974 crores. As the Chairman Singh's also saying during his speech, they exactly reversed it from the last year's profit to current year loss, which affected the consolidated performance of ONGC in total. Coming to OPaL. OPaL operated at average 82% capacity in FY '22-'23. OPaL also successfully completed its first major turnaround activity in the current financial year. We had a 2-month shutdown. OPaL earned revenue from operations of INR 14,593 crores during the year FY '23 as against INR 16,048 crores during the FY '22, reported EBITDA of INR 486 crores in FY '23. OPaL, as we all know, is one of the largest dual feed crackers in the world. Coming to OTPC. OTPC is a joint venture with government of Tripura. OTPC power generation increased to 4,936 MU in FY '23 as compared to 4,124 MU in FY '22. OTPC earned revenue from operation of INR 1,631 crores and PAT of INR 201 crore, highest production by any gas-based power station in India during FY '23. And OTPC also paid interim dividend of INR 0.00 (sic) [ INR 0.70 ] per share and final dividend of INR 0.60 per share. Coming to the fourth subsidiary, Petronet MHB Limited. Petronet MHBL achieved throughput of 3.894 MMT during FY '23, earned profit of INR 85 crores in FY '23, earned total revenue of INR 168 crores, paid interim dividend of INR 1.47 per equity share. IGGL is a joint venture with shareholding ONGC, 20%; IOCL, 20%; GAIL, 20%; OIL, 20%; and NRL, 20%. IGGL was incorporated on 10 August 2018, implementing the Northeast Gas Grid of 1,656-kilometer long national gas pipeline. This gas grid will be connecting from Barauni to Guwahati national gas pipeline as part of Urja-Ganga scheme. There's a 3-phase implementation with expected completion by 2024. The actual physical progress is 70.01% of the 31st of March 2023. ONGC TERI Biotech Limited is promoting and developing technology for use of microbes in bioremediation of soil affected by oil spill and promoting microbial-based technology for enhanced oil recovery. The financials for FY '23 for TERI is revenue from operation INR 37 crores and net profit of INR 19.2 crores. We had the national -- international recognition from S&P Global, 14 in top 250 global energy company ranking 2022; Fortune -- 190th globally and fourth in India Fortune Global 500 list 2022; 229 globally and fifth in Indian Forbes Global 2000 list 2022; rank of 404 in Forbes World best employers list in 2021; certified as a Great Place to Work third year in 2022; certified India's Best Employer Among National Builders in 2022. That's it from my side. Thank you all. Thank you for the patient listening.

Thank you, sir, for the detailed presentation on ONGC and group of companies. With the permission of the Chair, we now open the floor for interaction. If any participant would like to ask a question, please introduce yourself and mention the organization you represent. Kindly raise your hand and the team will assist in reaching you. So you can go first question.

So I'm Vikash Jain from CLSA. A few questions. Firstly, let me congratulate you on the net zero target. I mean that's a very ambitious target, I have to say, 2038. Just wanted to ask a few things. Is there any target on Scope 3 reduction by '23 and '38 as well? Like what percentage? That's one. Secondly, are there any interim targets around the 2038? Like what would the reduction be like for Scope 1 and Scope 2 by 2030 and then 2035, just to kind of keep track of that? So maybe that's the first one. I'll take the other 2 maybe after this. Is that okay?

Thank you for asking a lovely question. And first is Scope 3. So far, we have been focusing on growing plans for Scope 1 and 2. Scope 3, as you know, is -- basically our product itself is enemy of Scope 3, and we are sure that by 2030, we'll have more visibility of the way world is going. So the best time to take a pause and decide about the Scope 3 -- because we can announce some number. Some -- but some have done it. You must have seen some companies have done 7%, 8%, 20%, 10%, 30%. But doing anything in minority and giving a date, it is neither here nor there. So let's wait till 2028, '30. More visibility will emerge, and hopefully, we'll have some numbers, which is comfortable number, not a miniscule number for Scope 3. Coming back to -- there was some answer to your question #2 in 1 of the slide here, where it said 10 gigawatt by 2030. All I can tell you is our current Scope 1, Scope 2 emissions are around 8 million tons of carbon dioxide. So you can connect the 2, but we didn't want to exactly peg at what percent and all that because, as you know, Scope 1 and Scope 2 is literally fungible. So that is the reason. But you can be rest assured that 2030, we will have covered a good distance. If it goes -- because the way -- good distance about Scope 1 and Scope 2. But exact number, sizable number, not a small number but exact number is a tough answer. So I like to -- I'd not like to hazard a guess on that.

And this target, is this a group that is including your downstream subsidiaries, everything? Or this is just for your stand-alone upstream business?

So at the group level, yes, our aspiration is group. But as you know, our group, our bigger issue is ONGC. Scope 1 and 2 for Mangalore refinery, HPC has already announced 2040, right? Right, 2040? And MRPL, of course, goes with us, so -- and refinery, it is -- so you can take it that our major emission is group level if you see as MRPL and HPCL. So -- and if you ask me, we already have advantage of -- I would have announced a Scope 3 because we already have 3 million tons of pet chem. So if any company which is in an advantageous position today will announce some number about the Scope 3 is [indiscernible] as a group level. But still, we said it's still not working out to a number that we can talk about with great -- saying that will make a difference. But yes, you're answering your question. It is group level.

And on coming to the more mundane financial numbers, this one-off provision that you have made, I mean, it's in 9-judge bench you've said, so it's pretty -- almost near finality, I would say. So what do you think by what time? I know it's a court proceeding. We cannot predict. But is it a fair understanding that we should have some kind of a result perhaps in the next 12 months or so about this? Why I ask is, sir, I know that you want to be conservative, but if this turns out to be true by any stretch of imagination, the impact is going to be far beyond your company and into any form of any company, which uses any resource from the government. That resource might be airwaves. That resource might be coal mine. That resource can be anything. So essentially, the impact of this could be really far reaching. So that is why I -- conservative is great. But should we take it as suddenly you are feeling a little less confident on this than what you were feeling before you reported this quarter results?

So to answer your question -- this is also an intelligent question. So basically, the answer is, if you ask me, as individual, I am very optimistic. At Board level, we are very optimistic, and that is the reason for not providing you for the last 4 years. Okay? 4 years, we're hoping, hoping, hoping that, in any case, it is a done thing. We were very sure that it won't -- it will not -- will come our way. But last year, it became 3,000 crore. And because earlier, it was -- formula, do you remember?

[indiscernible]

13? So now if the size becomes much and individually, I can take a hit, but if something goes wrong, what happens to shareholders? So putting stone on our chest, we took the decision of providing for it in the interest of shareholder. If it comes, in any case, that money will flow to shareholders as dividend. If it doesn't come, we have already provided for it. So no management will be as fair and -- fair to a shareholder as we have done. I know for sure, many companies have not yet done and will not dare to do it because that -- because the impact of it. But more you prolong and if subdued, this matter doesn't get decided, the more the size of the problem. And more the size of the problem, less the ability to handle it if it goes against you. So it is a question of balancing. And in management, we call it -- the art of balancing the contradiction is called management. So we did management.

And the time line you think about the court case, what is your best guess? I'm not taking your word for it, but still...

This, I can't answer. This, I can't answer because Babri Masjid continued for -- so nobody can answer in this country how much time a case will take.

Sir, one suggestion and request. Since we are so confident about this thing, when this now becomes an annual entry in our books as a provision, this should be, in my opinion, shown as an exceptional item since that is something that we are so confident that it should not be.

But only good news for you is that in '23, '24, it is not the 3,000 crores because the price of crude and gas both have fallen, so it will not be as high as 3,000 crores. But definitely, it is an exceptional item. It will always appear as an exceptional item like the way it has appeared for '22, '23. So that we know that it is something that we are providing for in the interest of shareholders, but we are still 100% -- more than 90%, at our level, sure that it should come back to us.

Okay. Sir, one odd thing about this year's results was dividend payout. The payout ratio is about 36% or so, which is far, far lower. Like I was just looking through...

But it still is 225% of the share.

So most large investors and institutional investors look at payout ratio. They don't look at it as a percentage of face value or versus Y-o-Y. I mean you yourself are saying that on a real basis, profits are up 50%. So that's why I'm not comparing it to the last year where you had a noncash gain and the year before, which was impacted by very low crude prices. But if I were to look at FY '14 to FY '20, your payout ratio is anywhere between, I think, 43% to 65%. So this number, should I take it as maybe this year because you are thinking of this provision it's a one-off and possibly things will ramp up to a much higher payout ratio as it used to be the case or...

So if the judgment goes in our favor, that money will go back to shareholder. So it is their money lying in somebody's pocket, as simple as that.

So basically, this year, because you provided for it, that is why. But next year onwards, you -- one can...

No, we can't say because that, Board has [ to think about ].

No, no, I'm not talking about -- but one can expect because once you have provided for it, it's there. Then it's just a normal INR 2,800 crore, INR 3,000 crore kind of...

So the shareholders' money, if it comes -- if the judgment comes in their favor, either it remains a reserve or a dividend. There are only 2 ways.

Okay. But no, I'm talking about annual profits.

So either I give you a dividend, then you -- it will reflect in share price.

Okay. No, I'm talking about annual profits and the Board...

We are not -- see, Board decision, I cannot take unless the Board meeting happens. So this is a Board matter. At that point in time, we'll take a call.

Just one last one. Any update on Mozambique?

Mozambique, it was given. Work has started, and now it will get ramped up hopefully. If nothing goes wrong, we should have Mozambique gas by 2026, '27.

Sir, am I audible? Yes. Probal from ICICI Securities. So just following up on the Mozambique question. You said that the work has started. So '26, '27, if it starts up, are there any impairment charges that we have booked, which we expect to reverse if work sort of proceeds as planned?

This year itself, we have -- as the sentiments have improved and the cyclical situation has improved, we are in the final stages. Work is already happening on the ground. 2,700 people are on the ground. Force majeure should be reversed very shortly. The contractors have been sensitized to start work. Considering all that, we have reversed some of the impairment that we took, and as of now, we are working very positively at the beginning of construction in full swing and getting the first gas in '27.

Sir, what's the extent of impairment we have taken till date? Is it possible to put a number? And how much do we expect to reverse if, let's say '27 is when the project starts up? Because there's a time value involved in terms of the investments we have done, right?

We have reversed $317 million. That was the impairment we have provided in last 4, 5 years that we have reversed this year.

That's the extent of the impairment we have taken.

Yes. That, we had taken earlier, which has been reversed this year.

There is another aspect like, because it was in force majeure, all our costs, maintenance cost was in -- expensed our charged-off in PLL. Whereas once the construction start, it will be all capitalized, so there will be a gain there.

Okay. The second question was again with respect to OVL. Out of the 490 million tons or so of the reserves that we showed, how much is actually out of Russia as of now?

207 is Mozambique. Russia would be about 60% of the 491.

Okay. And you spoke about Sakhalin, where we are in the process of regaining the rights. Or have we regained the rights? I'm sorry if I wasn't very clear.

Sakhalin, let us be very clear. So Sakhalin, we are there for 2 -- more than 2 decades now. And in Sakhalin, ONGC Videsh has made a lot of returns on -- after 24th February of 2022, things changed, and operator, which was Exxon, declared force majeure. And for 7 months, production came down to 0. On 7 October, there was a decree of the Russian Federation, which stated that now the new operator would be an incorporated Russian company. It has taken over. And we were given the chance to reclaim our 20% rights in the project as we had earlier. Those -- we applied for that, and we have given those rights in November by the President of Russian Federation. So we are back in Sakhalin-1. However, there was -- the approval came with some conditions, which our obligations under the PSC. Once those obligations are transferred to the Russian entity, we would be getting full rights into the project, including our shares.

One last question from my side. You spoke a lot about the oil to chemicals aspiration that we have. And MRPL's petrochemical expansion would be one of the levers in terms of doing it. Just wanted to get a sense, is there any number of the kind of investment we need to make to sort of make that transition? Any numbers we have in terms of the exact pet chem expansion we'll be doing?

There are 2 parts to this question. One is the refinery itself has got some value streams, which can be easily upgraded to pet chem. So we are looking at INR 7,000 crore to INR 8,000 crore investment there. But that needs to be further detailed out and ascertained with respect to the liability. The other part is the major group to pet chem directly without getting into the [ recur ] of refining processing parameters. So that could be in the range of 30,000 crores to 40,000 crores, subject to detailing and valuation. So the job is on work in progress.

This is Amit Rustagi from UBS. Sir, I had 3 questions. First is relating to MRPL. That -- what is the time line we are looking at for the merger of MRPL with HPCL? And if there is any taxation-related issues in between and any time line specific to that?

Amit, I think this question is not MRPL since we are the holder of both MRPL and HPCL. So as a holding company, what I would like to tell you is that when OMPL and MRPL, they had merged, so at that point of time, the factor rate is 1st of April '21. As per the -- there were certain inherent business losses as well as unit acquisition losses. And at that point of time also, so we had taken that benefit, that benefit which will accrue to MRPL on account of this OMPL merger. So that benefit, that -- as per Income Tax Act, that it goes up to 5 years. So that is between the 2. There should not be a second merger. As per tax law, there should not be a second merger in order to get that benefit before 5 years. So I think that we will like to avail that benefit for the group's [ energy ] as a whole before going for the HPCL and MRPL merger.

Okay. So this means that till 2026, there cannot be any merger of MRPL and HPCL.

Yes. Otherwise, also, in case, like if there's -- some decision is taken, we vote. That, we will have to see at that relevant point of time. So then that -- the loss which we have taken the benefit, that will have to be given back. So these are all the balancing factors that we will have to see at that point of time, but from that time, I think it will take some time.

Okay. And my next question is to the Chairman, sir. Sir, you explained about the incremental gas price coming up -- the production coming up from the new wells. But can you explain it from a consumer perspective, like which set of consumers will be paying incremental? Because what we are seeing from the government perspective, that they're incrementally giving all the allocation to the CGDs. In fact, some of the allocation is being cut from the transmission sector as well to give the benefit to the CGDs. Now when 8% of your output will be earmarked for a higher realization, in this set of customers, whether it is fertilizer, LPG or CGDs, who will be paying the incremental gas price?

So the policy says that ONGC is guaranteed for price, but allocation has to be done by government. The government has to decide which sector will get this gas and which customer will get this gas. But the price, what we'll realize, that I spoke. So in any case, our role is limited to production and price, who consumes [indiscernible] for ONGC.

So basically, you're saying that -- and it is on new wells output, not really new fields.

New fields and new wells, both.

In any case, new fields which are outside the nomination regime, they're free to market -- marketing and also both freedom there. They have marketing freedom as well as they have pricing freedom. So all those areas are outside. This limitation is only on -- today limitation is only on 6.5. 6.5 is only limited to ONGC and OIL nomination field. For nomination field also, this dispensation has come. Any new well will fetch higher price. It means, today, ONGC meets roughly 35% of national gas demand. National gas demand is 61 BCM. ONGC produces roughly 21, 22 -- 21. So basically, this 35% is still CGD demand is far below this. CGD demand is still -- our country is far below this. So there is no -- I don't see any problem for next 10 years. After 10 years, yes, CGD [ may against it ]. But whatever additional number will come, it is not the CGD sector which needs this. It's somebody else. And somebody else will certainly pay for it because other choice he has is only imported LNG. And imported LNG will certainly cost more than this. So therefore, even there is a market security and also there is a price security doing this.