Oil India Limited (OIL) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. At the outset, Oil India Limited is pleased to extend a very warm and whole-hearted welcome to all the analyst and investors present on this occasion. We are happy to mention that today we have with us the Board of Directors of the company, represented by its Chairman and Managing Director, Mr. Sushil Chandra Mishra; Director of Finance, Mr. Harish Madhav; Director Operations; Mr. Pankaj Kumar Goswami; Director, E&D; Dr. Manas Kumar Sharma. We are also pleased to have with us Managing Director of Numaligarh Refinery Limited, Mr. Bhaskar Jyoti Phukan. We also have our residence Chief Executive, Director, HR Select, ED Finance and other senior officers of the company present on this occasion. I wish to make special mention of IIFL Securities who consented to volunteer this event for the company. Dear, ladies and gentlemen, Oil India Limited values its investors and analyst meet as an important event in its annual calendar. However, due to COVID-19 pandemic, the company could not organize this event for the last 2 years. Today, we are indeed very fortunate to have so many of you with us, and we convey our heartfelt appreciation for the confidence you have reposed in the company and your continued support to the company. With this, I now request Shri Harsh Dole of IIFL Securities for the welcome address to the house. Thank you.

Greetings. I'm Harsh Dole, energy analyst at IIFL. On behalf of IIFL Securities, I welcome you all for the Annual Analyst Meet of Oil India. It's my privilege to host this meeting in person after almost 2, 2.5 years. Welcome, everyone. To share Oil's performance and present its strategy for growth, we have the entire senior management team of Oil India. Briefly, I'd like to introduce, we have CMD, Shri Sushil Chandra Mishra. He is electronics engineer and an MBA and has worked with Oil India for almost 37 years. He has handled diverse functions like ERP, strategic planning, complex E&P projects, renewable energy portfolio, amongst others. Under his leadership, OIL is bracing to significantly step up the oil and gas production in coming years. We also have Shri Harish Madhav, Director of Finance and HR; Shri Pankaj Kumar Goswami, Director Operations; Dr. Manas Kumar Sharma, Director, E&D; Shri Bhaskar Jyoti Phukan, MD NRL. All the directors on the dais have more than 30 years of rich and varied experience. I have no doubt in my mind that OIL is in good hands to charge its future growth. During the discussion and the presentation, I'm sure the dignitaries will be able to address all your macro as well as micro concerns on the sector, company, et cetera. Without much of a delay, I'd hand over the floor to the management for the presentation. Thank you.

Thank you, Mr. Dole. I now request CMD OIL, Mr. Sushil Chandra Mishra sir, to kindly give his opening remarks.

Good evening, ladies and gentlemen. It is my privilege to welcome all the analysts and investors to this meeting. This, and seeing the gathering, it gives us a lot of confidence that our investors, our analysts are with the company. Most of you are aware about the company, our areas of operations, the policy environment relating to upstream oil sector in the country, et cetera. However, just to refresh, I would like to give a brief introduction of Oil India Limited. The company was formed in 1959 as a joint venture company between Burma Oil Company and Government of India. We are in existence for over 6 decades now. We became the central public sector undertaking in 1981 and currently, government of India owns more than 56% of its shares. Now I'll touch up on the current operations and future prospects of the company. As you are aware, until mid-90s, our operations were concentrated in Northeast India and little bit in Rajasthan. With the introduction of NELP, we started our E&P activities in other parts of the country as well as in the later part of '90s. And in the beginning of 2000 when OALP round came OALP and DSF, Oil India aggressively submitted its bid and won many block. Today, we are operating 66 E&P blocks, out of which 28 are nomination blocks; 6 NELP; 27 OALP blocks, which were acquired in the last 2 to 3 years only; 2 pre-NELP blocks; and 3 DSA block. These are spread in different geographies of India. We have also started overseas winter in 2006-'07. And today, we have our presence in Gabon, Russia, Mozambique, Venezuela, Bangladesh, et cetera. Our current production of crude oil and natural gas, it comes mostly from our oilfields in Northeast India, that is in nomination block and majority of natural gas partly comes from Rajasthan, about 10% of our total production and remaining 90% comes from Northeast only, Assam and Arunachal Pradesh. In spite of the fact that most of our fields are very old and matured, we have been able to maintain production through highly successful implementation of IOR EOR techniques. The company has achieved highest ever natural gas production of 3,045 MMSCM in '21-'22. That is an increase of more than 15% over the previous year. We have plans under execution for quantum increase in our oil and gas production. We also have 1,157 kilometer crude oil trunk pipeline for supplying ours and ONGC's crude oil to 4 refineries in the Northeast as well as transportation of imported crude for IOCL from Barauni to Bongaigaon. We also own a 660-kilometer product pipeline for transportation of finished white oils produced by Numaligarh Refinery to their Siliguri marketing terminal. The pipeline capacity is being augmented to cater to the future higher capacity of NRL, which is planned by them. OIL had recently declared its best ever financial results, both as a stand-alone and consolidated basis. Due to our presence in the Northeast part of India, which is logistically a highly difficult area, we have developed complete in-house expertise in E&P value chain. This has now become one of our key strengths. We have become the first company in the country to commission a pilot plant of 100-kilowatt capacity for production of green hydrogen in the state of Assam. The plant is based on [ AAM ] technology for production of green hydrogen of 99.999% purity. OIL has also entered into collaboration with the startups for development of green hydrogen utilities. The company is currently drilling its deepest onshore well in Sadia in Assam, which will be about 6,500 meters deep. The company has completed committed seismic acquisition in 17 of the OALP blocks. The company is using advanced exploration technologies, including airborne gravity gradiometry and gravity magnetic survey as well as passive seismic tomography for seismic data acquisition. The company has prepared a strategic plan 2030 with primary focus on use of advanced techniques to improve existing productivity, pursuing exploration and production efforts, inorganic growth, forward integration and nonconventional energy sources. Our company is led by a very experienced management team with each director having over 30 years' experience in oil and gas sector. We have best of both the words with independent and autonomous management and the benefit of government of India linkages, which add to our capabilities of engaging with overseas counterparts, which helps us with government-to-government linkages in oil and gas industry. With this, I would like to request my colleagues to take forward today's presentation and discussion. I once again thank you all for joining us today.

Thank you, sir, for sharing the valuable insights about the company. I now request Mr. [indiscernible], our Director of Finance, to give the presentation to the house. Thank you.

Thank you, [ Krishan ]. Dear analysts and investors, respected dignitaries on the dais, a warm welcome and a very good evening to all of you. Indeed, we are really grateful to see such a large gathering today. And as Shri Mishra has said, it really boost up our confidence. I'm starting this presentation. We -- in the session, we are covering an overview of the company, the strategic strength of OIL, its assets and overview, operating and financial performance of the company, OIL's growth strategy as well as the key highlights on ESG. As you know, OIL was incorporated in 1959 and it's almost 6 decades the company is in the oil and gas sector. We have very strong partnership with Government of India. The company got nationalized in 1981 and then subsequently with its consistent performance, we would receive navratnas datas in 2010. Currently, Government of India is having 56.66 percentage shareholding in the company. We are an integrated and a fully serviced oil and gas company. We have a presence in the [ anchor ] oil and gas value chain. And as the presentation will go, you'll see that we have a presence in refining. In addition to E&P, we have got presence in refining, in transportation, crude oil transportation, natural gas transportation, in petrochemicals, in renewables. So we are a truly integrated oil and gas company. We have, over the period, developed very sound infrastructure as well as in-house expertise to carry out any E&P activity. OIL uses its in-house infrastructure and expertise for all the E&P activities and, as for the business requirement, we also outsource. We have group pipeline, which is 1,157 kilometer long. It starts from the [indiscernible] Assam to Balani in Bihad. We also have one product pipeline, which is basically used for transportation of the product of Numaligarh Refinery. It's owned and operated by OIL, and the pipeline is from Numaligarh Refinery to Siliguri terminal. On the acres front we have domestic 66 blocks with around 64,000 square kilometer. And on the international front, we have presence in 7 countries, in 10 assets around 44,000 square kilometer of acres. We have a strong reserve base. Our 1P reserve for crude oil covers around 10 years of our production, if we consider the current trend, and our 1P reserve of natural gas covers around more than 25 years of our production at the current trend. We are consistently, through innovative technologies, are maintaining a reserve replacement ratio of more than 1. At the group level, our financials, the revenue part is for financial year '21-'22, INR 30,000 crores. Profit after tax for financial year '21-'22, INR 6,719 crore and an equity base of INR 26,361 crores. A brief introduction of the management team. We are led by our Chairman and Managing Director Shri Sushil Chandra Mishra, with a 37 years plus experience in the industry; Shri Harish Madhav, Director Finance, Shri Pankash Goswami, Director, Operations; Dr. Manis Kumar Sharma, Director, Exploration and Development, all having 30 years-plus experience in the industry. In OIL's Board, the patent government nominee Director is Shri Asheesh Joshi. He's the IS of 2006 batch and is a widely experienced official holding different post in government departments. We have got 6 independent directors, Dr. Tangor Tapak, Shri Gagann Jain, Shri Anil Kaushal; Ma'am Pooja Suri, Shri Raju Revanakar and Shri Samik Bhattacharya. All are eminent personalities in different fields of life, having a wide range of experience and contributing towards the management of the company by participating in all the Board meetings and also as Board committees, members of the Board committees. It gleans on the shareholding structure of the company. We're listed in both NSE and BSE. Number of shares is 108.44 crores. Our EPS for last financial year '21-'22 is INR 35.85 per share. We have, in last fiscal, already paid an interim dividend of INR 9.25 per share and Board in its last meeting has approved -- recommended in fact, a final dividend of INR 5 per share for approval of the shareholders. The market cap of the company, considering the share price on 27th of May, is INR 23,635 crores. Shareholding percentage for the company, Government of India is 56.66%; domestic institutional investors, including LIC is 15.96%; FIs, 12.14%; corporate board is 10.07%; and others, 5.16 % A snapshot of the company's journey since its incorporation. As I was mentioning, OIL was formed in 1959, was nationalized in 1981. We participated in the NELP round 1 bidding in 1999. In 2009, we went for the maiden IPO of the organization, which was a resounding success. In 2010, we got the [ noble ] status. In 2012, we entered the renewable domain. In fact, OIL as on date have 188-megawatt of wind and solar energy. Also, in last year, we have set up the first of its kind green hydrogen plan in the country. In 2013, we took our maiden international credit rating from Moody's and Fitch. We went for raising offshore fund for procurement of the -- our stake in Rovuma block in Mozambique, a prolific gas reserve. And at a very competitive price, we could complete the raising. We acquired in 2016, 2 prolific gas -- oil and gas fields in Russia, TYNGD and CJSC Vankorneft. This was true consortium of OIL, IOCL and BPL, the wholly owned subsidiary of Bharat Petroleum. We also participated aggressively in all the bids of OLP, DSF as well as city gas distribution in 2018. We have, as we'll be showing in the slides, around 27 blocks of almost 50,000 square kilometer of equities under the OLP bidding rounds. Financial year '21 was a significant development for oil as we acquired the measured stake in Numaligarh Refinery. We were already having 26% stake in the refinery and we take consortium of EIL and government of Assam. We acquired our stake was 69.63%, current stake in Numaligarh Refinery. And with this acquisition, we have become a truly integrated E&P and downstream with a major presence in downstream industry as well. In financial year '22 -- '21-'22, as I was mentioning, we have also set up the first green hydrogen plant of the country. This was using an AAM technology and with a hydrogen purity of 99.999%, 5 9s. So currently, we have got a tie-up with [ IAT ] Guwahati to explore a further scope in this regard. A view on the company's current credit ratings. We have got investment-grade ratings from international agency Moody's and Fitch. Moody's, our rating is Baa3, with a stable outlook. Fitch is BBB negative. For -- on the domestic front, we have got ratings from CRISIL as well as CARE. Both the organization has given us the highest rating for our long-term instruments, AAA. And for the short-term instruments, A1 plus. CRISIL rating, we -- the maiden rating was in last year, in '21 financial year. Just to again highlight a few of the key performance of the company for financial year '21-'22, as we were mentioning that we had the highest turnover and the highest profit after tax in financial year '21-'22. Our major subsidiary in Numaligarh Refinery also reported the highest profit after tax during financial year '21-'22. On the physical front, our crude production also increased by around 1.5% and gas production increased by around 15%. We received a gas production of 3,045 MMSCM in financial year '21-'22. As I was mentioning, we're the first company in the country to commission a pilot plant of 100 kW capacity based on Anion Exchange's membrane technology for production of green hydrogen of 99.99% purity in the state of Assam. We got the maiden rating, the highest rating from CRISIL last year. And we are also proud to say that we have got 0 comments from government audit for consecutively 19 years, which definitely shows our standards of ethic, transparency and integrity. A view on the overall group structure of the company. On the overseas front, we have got presence in -- currently in 7 countries in 10 assets. Out of that, 4 are producing blocks, 4 are exploration blocks, and 2 are development blocks. We have got 2 assets in Russia which are regularly paying us dividend since its acquisition from 2017. All these acquisitions went through our wholly owned subsidiaries, foreign wholly owned subsidiaries or step down service or SDS. On the domestic front, as I was mentioning, we have got presence in the refinery sector through our stake in Numaligarh Refinery. We also have 5% stake in IOCL. On the petrochemical side, we have got 10% stake in BCPL and NRL as they also have holding 10% stake in BCPL. So as a group, we have got 20% stake in BCPL. For -- under entity, Assam Petrochemicals Limited. We have got 48.68% stake. This is also in petrochemicals. In Gas Transportation, we have got stake in Duliajan Numaligarh pipeline. That is -- we have got 23% stake. And we have got in reposted Gas Grid Limited, we have a 20% stake. IICL is formed basically for gas connectivity to all the Northeastern state capitals. So friends, you can see that we have got variance experience in -- and our presence in all these diversified entities. Also on the CCD part, HOGPL and PGGPL. They have this presence. HOGPL is basically doing CNG stations in Maharastra as well as in Haryana. PGGPL is for the Northern states, and we have got stake in HOGPL. With HPCL, we have got 50% stake. In PGGPL, we have got 26% stake. A snapshot of the -- our stakeholding in all these different entities on the domestic front. As we are mentioning, OIL is a truly integrated oil and gas player. On the exploration front, we have got domestic 66 E&P blocks. And on the international side, we have got presence in Russia, Venezuela, Mozambique, Gabon, Libya, Bangladesh as well as in Nigeria. We have got production -- on the production front, we have got crude oil installations, 48 installations and 1,670 kilometers of pipelines. For national gas, we have got 29 installations and 730 kilometers of pipelines. The company has been pioneer in utilizing all state-of-the-art technologies to maintain each mature fields and to ensure a steady production. We have been consistently producing 3 million metric tonne plus. On the transportation front, we have got the pipeline of 1,157 kilometer, which has a capacity of 6 million metric tonne. We have the product pipeline, which is 660 kilometers long, 1.70 million metric tonne capacity. This is also undergoing revamping to cater to the needs of Numaligarh Refinery as the refinery is going through measure expansion plan. On the national gas front, we have got 33% stake in the NPL in Northeast, which is having a 192-kilometer pipeline, 20% stake in IOGL. On the downstream side, 69.60% in NRL. We have got 10% stake in BCPL, 48.68% stake in IPL and CityGas distribution, 4 geographical areas. On the nonconventional energy part, we have got Wind Energy, we have got presence in solar energy as well as in green hydrogen. OIL over the period, over the years, of its presence in the O&G industry, has developed in-house expertise and is capable of carrying out any E&P activity through its in-house resources as well as in-house expertise. We have got resources and expertise to compete systemic drilling, logging, field development, production, field reserve management, IOR, EOR in the entrant of the E&P business. We have our own resources, internal sources to complete the activities. We have got production and storage facilities also which are commensurate with the current production that we are having. On the technology journey, as you can see from the graph, we are maintaining consistently 3 million metric tonne plus production through adoption of advanced technologies. All our fields -- most of the fields are mature fields. Of course, we have been able to replenish whatever we are producing from these fields. We have been using technologies for intensive exploration as well as for enhanced production. Technologies like alpha dominant frequency processing, cableless seismic data acquisition, passive systemic tomography, again, for enhanced products and extended reach drilling, hydrofracturing chemical water setup. All these are state-of-the-art technologies, which the company is using to sustain its production, maintain its reserve replacement ratio. A few slides on the Numaligarh Refinery, our material subsidiary. We acquired Numaligarh Refinery stake in 2021. Numaligarh Refinery is a state-of-the-art refinery in the state of Assam with current capacity of 3 million metric tonnes. It has a high complexity, Nelson Complexity Index of 9.2%, which enables it to diverse -- produce diverse products. It has a very consistently high distillate yield and high refinery margins. The refiners have 2 marketing terminals. One is at Numaligarh as well as 1 at Siliguri, which is connected to the product pipeline owned by OIL. Refinery has credit rating for CRISIL, AAA and stable A, the highest rating. Currently, the refinery is going through a major expansion of increasing its capacity from 3 million metric tonnes to 9 million metric tonnes. To cater to the additional 6 million metric tonne, there is a parallel project going on of laying a pipeline from [ Odisha ] to Assam for connectivity. Numaligarh Refinery is already currently selling products to Bangladesh and is also in a project of creating product pipeline from India to Bangladesh. Refinery is having another project of biorefinery for production of 2G tunnel, which is in advanced stage. A glimpse of the physical properties of the refinery. On the financial side, as I was mentioning, the profit after tax for the refinery for last year was the highest, as reported by Numaligarh Refinery. The EBITDA margin percentage was around 22%. The refinery gross margin -- gross refinery margin is around USD 14 per barrel. Details on OIL's domestic acreage. We have got 66 blocks with an acreage of 64,000 plus square kilometer. We are operator in almost 59,000 square kilometer of all these blocks. And you can see that under OLP bid, we have got 27 blocks with almost 50,000 square kilometer of acreage. So it shows the way aggressively we are going for bidding in the OLP blocks. A glimpse of the presence of the different blocks across the country. The green blocks are basically for the OLP round blocks that we have got. And you can see that all throughout the country, we have got our presence. A glimpse on the overseas assets presence for the -- for OIL. We have got producing assets in Russia, 3 fields: the CJSC Vankorneft, TYNGD and License 61. And also a stake in Venezuela, that's also a producing field. We have got development assets in Africa. We have got exploratory assets in Africa and 2 blocks in partnership with OIL we are doing in Bangladesh. A few details on the Russian assets, which are paying dividend to us from 2017. We acquired TYNGD 29.9% stake with IOCL and BPL. The total acquisition cost was 1.1 billion and OIL share was 392 million. Against this, you can see that we have already received our share of dividend to the tune of around USD 272 million. The field is located in Eastern Siberia in Russia. OIL share of 2P reserve is around 10 million metric tonnes, and the current production level is around 1 lakh BOPD. We have got another huge asset, very prolific in CJSC Vankorneft, Russia. This is also in Eastern Siberia. The acquisition cost was 1.8 billion with OIL's share, 598 million. We have received cumulative dividend of 391 million from this field. OIL share of 2P reserve is around 13 million metric tonne. We have got under stake in Area 1 Rovuma, Mozambique. It's one of the largest gas reserve. Our acquisition cost was almost 1 billion. The -- we have completed -- the project has completed FID in June 2019 and project financing, the closer was received in March 2021. Currently, the project is under force majeure for security concerns. Other entities which are having stake in this project are BPRL as well as OIL. You can see that OIL has consistently performing for crude oil production. There's a major increase of around 1.5% if we compare '21 to '22. On the gas front, we produced 3,045 million MMSCM of gas, which is around 15% increase over last year. Our reserve base, as I was explaining, it's with the crude oil reserve of 1P reserve for almost 10 years equivalent production, and natural gas reserve of around 25 years production. On a 2P reserve basis, our percentage of gas reserves around 63%. And for crude oil, it is around 37%, and the reserve replacement ratio is consistently more than 1 for financial year '21, '22. It is 1.11. Price realization last year was very good. For crude oil, the average price realization was almost $79 per barrel. And net realization after the state levies is around $53 per barrel. For natural gas, as we will be ever that there was a good price hike. And for the period April '22 to September '22, the current price is USD 6.1 per MMBTU. Financial performance of the company. We got a revenue of INR 16,428 crores last year. The EBITDA margin percentage increased from 30% to around 44%. We reported the highest PAT of INR 3,887 crores. EPS for last year was INR 35.85 per share. Our net worth increased from INR 24,500 crores to INR 26,979 crores. We paid a handsome dividend last year. Government of India's share was around INR 670 crores and for other shareholders, it's around 876 -- sorry, 876 for Government of India and 670 for the other shareholders. And the dividend payout ratio is around 40%, which we are almost consistently maintaining. Book value per share for last year is INR 275.64 per share. Oils dipped as on 31st March 2022 is INR 11,636 crores with a debt to equity ratio of around 43%. At the group level, our debt stood at INR 16,388 crores as on 31st March, 2022. Central -- contribution to [indiscernible] will contribute through income tax payment from process payment through dividend payment to [indiscernible] for the state [ Exato ] royalty payment and wet payment. On the CapEx front, for the company's growth strategy, we incur around INR 4,300 crores average as CapEx per year. And we spend around 55% of the total CapEx for core E&P activities, seismic, exploratory drilling, development drilling. Our actual expenditure reported for '21-'22 is INR 4,277 crores. And for '22-'23 plan is INR 4,302 crores. Just to share with you the short-term growth perspective of the company. We are on [ mission ] 4 plus. We want to increase our production from the 3 MMT level to 4 MMT level. With this target, we have prepared enhanced production profile for all the oil and gas producing fields and the nomination regime. This was vetted by one of the renowned international SNC D&M. Five trust areas were identified, 3 in Assam, 1 in [indiscernible] and 1 in Rajasthan. The target is to do 75 wells to be drilled over a period of 4 years. And it is expected that this will contribute around 30% additional production from this trusted [ ES ]. During '21-'22, we have drilled 8 numbers of wells. And the additional production received is 1,612 scale per day against the target of 1,126 scale per day. We have a long-term strategy. This was adopted in 2016, Mission 2030, where we have an ambitious target of increasing our production in both domestic and overseas to 15 MMToe. And we want to increase our production from outside Northeast as well as overseas by more than 50% of this total production. We also want to be recognized as a renowned player in managing matured assets. Currently, different steps have been taken so that we are on track for Mission 2030. Some of the strategies to receive this 2030 aspirations reimagined main producing area development to maximum potential, state of exploration and development activities in select Indian basins, built international presence at scale in 1 or 2 geographic clusters, pursuing selective profitable diversification in the energy regime, restructured organization and people processes to deliver the prospective plan. We are taking all initiatives to have a sustained ESG compliance in the field of carbon transition, in the field of physical climate rigs, water management, pollution and risk management, natural capital. The company's management is taking all required stakes so that we are ESG-compliant. Both international rating agencies, Moody's and Fitch have kept us at par or in a better position on the ESG scores with our most of the peer entities. OIL is known for its CSR initiatives. In fact, we have got a lot of awards and accolades from all the fronts for our CSR initiatives. We are called the People's organization. Some of the flagship projects, which the organization has taken during the years like [indiscernible]. So all these are to cater to the needs of the extended family members of the corporate. OIL has taken good initiative to -- in management of COVID. A 100-bedded COVID center was set up at Buliisa, where is our -- the operational headquarter is there. We supplied oxygen plants in different states, 5 in Bihar, 2 in UP, 1 in Netherlands, 1 in Pradesh. We have supplied oxygen cylinders to different parts of the country. We have taken extensive measures to ensure that complete vaccination is done for all the employees, their dependents, the business partners, including the contract workers, channel partners and nearby community. Friends, to summarize. OIL India is a steady -- having a steady and sustained growth with a sound financial health and a strong operating track record with its 6 decades of presence in E&P expertise is spreading its wings in Northeast, pan-India and global. We have got large prospective E&P. We are a pioneer in pipeline transportation. We have acquisition of discovered and producing assets, and we are diversifying into new areas, but remaining focused on our core area of E&P. To share with you, we have got dedicated officials to cater to the needs of the institutional investors as well as retail investors. Thank you very much.

Thank you, [ David ]. It was such a beautiful presentation on the company's past, present and future. So now the house is open for question and answer session.

My first question is on fourth quarter funds. So we are investing and most especially now [indiscernible]. And last year, in FY '22, we have, as was mentioned -- we have average DRM in FY '22. So if you could guide us what type of premium in DRM we should profit on our forecast. That's my first question. The second question is that one of the reasons why public sector, the ratings typically stay substantially below fair value. One of the reasons why essentially below fair value is that the execution track record in terms of very large projects has been -- has not been as well as one would have hoped for. Like in the case of NMDC, their steel plant has taken like several years beyond what was initially planned. So this expansion from 3 million to 9 million, we've already seen the planned project CapEx being revised more than once on the upside. So if you could guide us with some realistic time lines in terms of when this project can actually be commissioned.

Thank you. I'll request Bhaskar Jyoti Phukan to address the issue, the 2 questions.

Yes. On the first margin, the DRM, you have seen that generally, we are a typically $7 per barrel refinery, if you see the track record because our distillate is extremely high. It is based among the oil PSUs. We convert 0.86 tonne of product from 1 tonne of crude process. That is the kind of distillate that we have. If you see the risk, they are at around 79% to 78%. So therefore, our margins are generally good and last year was exceptionally good because of the Ukraine war and then split between diesel. And because we are mostly a diesel refinery as of now, we have a hydro cracker, we maximize the diesel production. So that being the case, the past 2 months of the current financial year was even better. You know that diesel spread was hovering around $47 in the month of March. It has marginally come down now. It is in mid-30s now. So therefore, our margin this year are also going to be very high if the things remain the way it is today. That is the first part of the question. We also get excise benefit on top of that. I'm not -- these figures are excluding the excise benefit. If you top it up, it will be much more. Second, your concern about the execution of the project. See, from my knowledge and the kind of dedicated team that we have on there, we have -- I am committing that this project is not going to be the way normally the government sector projects are doing because it was our dream project. We are pursuing this project from the year 2011, but it got approved in 2019. So enough planning and preplanning has been done, and we are working day and night to see, but we were not helped by the 2 rounds of COVID that we had and the cycle of commodity price increase that is actually affecting the prices like steel, which is predominantly used in the construction of the refinery. So those are the facts that you have to bear in mind. As far as revision of CapEx is concerned, we -- as I had mentioned, because we had started the refinery configuration in the year 2011, had we parceled the same refinery configuration, we would have stayed with the same prices that we were approved that is INR 22,594 crore. But we thought that it is not prudent to have a refinery, which was envisioned in the year 2011 to be executed in 2024. Definitely, things have changed drastically as far as auto fill demand is concerned. We need to build flexibility for future. So that is why we have brought in a lot of other plants within the configuration so that we can be flexible in our product portfolio. Typically, we have gone the petrochemical side. Therefore, we have inducted plants, which were not part of the original configuration. So there was a scope change in between. That is why we went back to the ministry. And with their approval, now we are at INR 28,026 crore. But I'm assuring you it will be a very smart refinery with a lot of flexibility. If the auto fill demands were to go down in future because of the very aggressive intervention of EVs, we will still survive.

And on the excise duty benefit, it was reduced to the current level some years back. So is there any risk that this excise duty benefit may be reduced further at any stage ahead of the sunset clause?

One thing, there is no sunset clause, fortunately. But it is the government to decide. And I would not be able to comment on what government will decide on the excise duty.

But depending upon the scenario, they may take some decisions. It may go and increase also.

But statistically, if you see the prices go down generally, they map up with additional revenue, and that actually helps us.

Right. So on this INR 28,000 crores CapEx, what is the time line in terms of spending this? Is it 2 years?

It was a 48-month target, so we should be up and running by end of '24.

And how much have you already spent?

We have spent -- we have committed around INR 16,000 crores already. But spending, I think, around INR 4,000 crores, we have already spent.

Okay. Okay, fine. My next question is on the overseas exploration blocks. So in the recent ONGC analyst meet, which they had, there was a mention that out of the 3 blocks which they have in Russia, one of them is facing some logistical issues. So what I would like to understand from you in terms of our 3 blocks, are they all functioning as per plan so far? Or there is any disruption? Number one. Number two, in terms of the dividend flows, I believe it's quarterly. So how are we planning to get the July dividends? Or is there any revisiting of the methodology of getting those dividends?

Yes. Actually, as far as the Russian blocks are there, we have not come across any such issue. The crude oil and gas, they're in sale, normal sale, there is no problem as such. As far as dividend is concerned, it is -- I understand it is declared 6 monthly, January, February, it came. Now it should come in July, I guess. So far, we have not thought of any alternate method. We are hopeful that things will be settled down by that time. So we'll give chance to others also.

We have a request to the audience. So whoever has any questions, kindly mention your name and organization name.

Yes. My name is [ Vipul Shah. ] I'm an individual investor. So can you quantify the excess benefit now for the NRL?

It is in the order of around INR 3,500 crores like that.

INR 3,500 crores, annually? Irrespective of the quantity?

Yes. No, it is specific.

It is specific to '21, '22.

So as the rates vary, it will vary. But fortunately, excise duty is on specific. It is not ad valorem, so it doesn't vary with the price.

So what will be the benefit once you reach your full capacity of 9 million metric tonnes?

It should be in excess of INR 10,000 crores. But we are trying to become independent of excise duty because the kind of valuations that we are envisioning, so we will visually become independent of this benefit.

And sir, would you repeat the CapEx already done? You said INR 4,000 crores?

INR 4,000 crores, money has gone out, but our commitment to the market is in excess of INR 16,000 crores.

So what will be your peak debt for this project?

We have tied up around INR 18,900 crores. But we may not require to draw that much. We have flexibility. And if the revenues are as buoyant as we have seen this year, so we might end up growing a little lesser than that.

So what was your standalone debt as of '22 March?

We didn't have any standalone prior to this expansion plan. And for this expansion plan only some drawdown has been seen.

And some drawdown around INR 900 crores, we have drawn last financial year.

But since it's a huge CapEx, we will grow -- you will need to do -- my question is what will be your peak debt?

Yes, peak debt is INR 18,900 crores. After that, the repayment will start.

And last question, can you give your product slate? I mean you said you are heavy on diesel side, so if you can?

Yes, almost. We are almost around 69% of diesel as of now, but we have little flexibility over there. Almost 15% additional is MS. The rest, it is flexible, we can produce ATF to the requirement because kero, almost we have run down to 0. So we have pet co which is also an upgrade. So these are the things that we produce.

Yes. So what I would like to understand is in terms of the next revision on the gas prices, which is due in October, there is -- given the inflationary trends, there's a lot of uncertainty about whether the kind of increase, which is warranted will happen. So do you have any comment on that? Number one. And number two, on the speculation around the windfall tax, whether you think this is something which is even in the realm of possibility or we can safely assume that it's speculative?

Yes. As far as this windfall tax is there, there has been some rumors here and there. But there is no communication on that. There is no discussion going on as far as our knowledge goes. So let us not speculate. If something comes, we'll see on that. And the same thing on gas price, it is going to increase from October session also. But if you see the international gas price and all, it is still -- I feel it is much competitive in India. So we feel that this free marketing freedom will remain, and they will give the increase whenever it comes.

Okay. And one last question. You have mentioned in your presentation that 30% increase in production should come from the new field, new wells, which you are planning to take. What I would like to understand is from your existing results, what kind of ramp-up is possible, a? And b, you've given a long-term vision over 15 years -- that you want to increase it to 15. But if you could give us a more shorter-term vision like 3 years or 5 years?

That's we have already told in the shorter term, '24, '25. We are trying to increase the crude oil production from current 3 million to 4 million. And this is coming from our existing fields only, existing reservoir only, only accelerated drilling program because we are adding some reserves also continuously. So there are 5 fields identified and all our nomination block, where we are currently producing.

So the new ones are beyond that?

Yes?

The new ones will come beyond '24, '25?

Yes. New ones this OALP and, other thing, it takes 5 to 7 years to come to know about their prospectivity.

Sir, can you give your exploration and development cost per barrel?

Our total production cost per barrel is about 34 to 35.

It includes both exploration and development?

Entire thing, finished product, I'm talking about in total.

And sir, lastly, on NRL debt, so it will be taken on the books of Oil India? Or it will be on the books of NRL?

It will be in the book of NRL.

That will be on the stand-alone books of NRL, but we consolidate NRL into all other books.

And what is the coupon rate, sir?

Sorry?

For 18,000 bank credit line, which has been approved, what is the coupon rate?

Target at 7.05%. But the recent revision there is marginal increase. It is a floating rate.

7%, roughly?

Roughly 7%.

You talked about the exploration cost, exploration development, that is around $7 to $8 per barrel of oil equivalent. Only exploration and development.

I'm [ Mrs. Patel ] over here. I would like to ask a question regarding Oil India has come out, it's a plan to have hydrogen-run gases. Hydrogen-run gasses along with the blending with the natural gas. Sir, could you throw some light on it? It will be operated in Assam? Will it also be operated in cities like Bombay and Delhi in the future? My second question runs, as so we have now Mr. Ranjit Rath as our new Chairman. Is he present here at the meeting today? If he can be introduced to us over here, if he is there. These are my 2 questions, please.

Okay. Thank you, [ Mrs. Patel ]. On this mixing of hydrogen with the CNG or natural gas, this is on a pilot basis. It is being studied by [indiscernible]. And in fact, other petroleum companies, they are also having some R&D. As of now, worldwide, 15% to 20% mix is allowed. First, we have to produce the green hydrogen. Once these are increased, there are more plants, definitely, it is going to be mixed with the CNG as well as the natural gas. And if it is mixed in Assam, it can be mixed in Maharashtra. So there should not be any doubt in that. Regarding Mr. Rath, I don't know whether he's here or not. He will be Chairman from 1st of July. So let us see.

Thanks for the opportunity. I'm an individual investor. I have a question that currently oil is trading at $120 a barrel. But as in when the Russian Ukraine crisis has settled down, we may see the price coming down to maybe $80 a barrel. And 1 year down the line, about $60 a barrel. So in this situation, will our top line margins look like a percentage-wise basis in FY '23, '24? Will it deplete or we maybe see a similar performance? And the second question is, sir, what will be the potential companies targeting from the DSF Round-III? And we are the awarded, any blocks, by when we can expect this field will come into operation, any time line you can give us? And my last question is Oil Ministry is planning the boost to domestic crude output. So they have plans to sell PSU dormant oil fields to small private players in the market. If this thing happened, will this more benefit to the company or affect the future plans? That's all from my side.

The first DFS block, DSF, we have taken 3 blocks. And this is very, very small blocks. Not a very huge production is expected from these 3 blocks. These are in difficult areas, and we hope to do a lot of development. The first production is expected only after 1.5 to 2 years. We have got 1 in Tripura, the one in KG Offshore. KG Offshore, things we are trying to expedite. Because it is offshore, it may take some time, 1 to 1.5 years. And there, the production was not very high and that is why it was given for bidding. Your third question was regarding that...

Oil ministries planning to boost the domestic crude oil output. So they have plans to sell PSU dormant oil fields to the small and private players in the market. If this thing happened, will this move benefit the company or affect the future plans?

Actually, if you see this plan has been going on for the last 4, 5 years. And definitely, some of the private players, they have come in through either OALP or through DSF or through PSC. But those blocks, which we are awarded, Oil India awarded 1 block to 1 company but they have not yet come up with any development activities in those. And that is why now we are trying -- ONGC and Oil India, we are trying to engage with some of the companies who can come -- who can partner with us, share the profit, share the enhanced production. And then we can introduce them in our own field. And the first question was regarding this crude oil pricing.

I think you wanted to know whether prices come down from $100 to $80.

I'll repeat the question, sir. Currently, oil is trading at $120 a barrel. But as when the Russian-Ukraine crisis settle down, we may see the price coming down to maybe $80 a barrel. And 1 year down the line, about almost $60 a barrel. So in this situation, how will our top line margins will look like on the percentage-wise basis in the FY '23, '24? Will it deplete or we may see a similar performance?

If it is -- the prices are coming down from $120 to $60 per barrel scenario which you are anticipating, so naturally, the bottom line, top line, everything, margins will come down because we are not operating on the margins. We are operating purely on the crude pricing. Unlike refineries, who operates on the refining margins. So naturally, there will be some effect on the bottom line as well as on the top line.

So once again, I'm [ Mrs. Patel ]. I would like to know that our Bombay High is very rich in natural resources, natural gases. Has Oil India has any plans to join with Bombay High in the future? If you could throw a light on it.

ONGC is obviously...

You all are mainly in the north. So any plans for the west?

No. Actually, ONGC is already operating in Bombay High. So there is no need to -- no need for Oil to go -- and that is a nomination block. It is awarded to ONGC. So there is no plan to join hands with them at the moment.

If there is no further question, then I request our Resident Chief Executive, Mr. Pankaj Kakoty to kindly jump forward for offer of thanks.

Good evening, everyone. I take on the responsibility of extending our deep sense of gratitude to all the investors, be it the institutional investors, analyst here, in fact, a few retail investors. I think your presence here truly reflects the fighting spirit that these people have to further the growth of the organization. We are extremely overwhelmed. I'd also like to put on record our appreciation to the CMD and the Board of Directors of OIL India; Mr. Bhaskar Jyoti Phukan of the Numaligarh Refinery Limited, he's the Managing Director. And of course, IIFL has really greatly largely helped us in organizing this event. With this, thank you once again. Please join us for dinner now. Thank you.