Bharat Petroleum Corporation Limited (BPCL) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Bharat Petroleum Corporation Limited Q1 FY '22 Post-Earnings Conference Call hosted by IIFL Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harsh Dole from IIFL Securities. Thank you, and over to you, sir.

Thank you, moderator. Greetings, everyone. On behalf of IIFL Securities, I welcome you all for first quarter FY '22 post earnings conference call with Bharat Petroleum Corporation. To discuss company's performance and share the performance outlook, we have the senior management team today. The management team will be represented by Mr. V.R.K. Gupta, CFO; Ms. Jenny DGM Pricing and Insurance; Mr. Girwar Bhattad, Senior Manager, Corporate Treasury; and Mr. Piyush Borania, Senior Manager, Pricing and Insurance. I'd like to hand over the line to the management for their opening remarks subsequent to which we can open the floor for Q&A. Over to you, Piyush.

Thanks, Harsh. On behalf of the BPCL team, I welcome one and all to this post Q1 results con call. Before we begin, I would like to mention that some of the statements that we would make during this con call are based on our assessment of the matter, and we believe that these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. Since this is our quarterly result review, please restrict your questions to the Q1 results. I now request our CFO, Mr. V.R.K. Gupta, who is leading the BPCL team for this call to make his opening remarks. Thank you, and over to you, sir.

Good morning, one and all. I hope all of you are keeping safe and healthy during the uncertain times. Welcome to the Q1 con call. BPCL has been supporting the Government of India and the state government in the fight against the pandemic by taking various initiatives. We have provided vaccination logistic-related cold chain equipment in Uttar Pradesh and Haryana. We have taken initiatives for providing PSA oxygen plants in Maharastra, Kerala and Madhya Pradesh. Our refineries are regularly supplying medical oxygen to hospitals. Further, we have provided oxygen cylinders, concentrators and PPE kits to various frontline workers. Going on to our results for the quarter. I hope you were able to go through our handout for the quarter. I would like to highlight a few points relating to the quarter gone by. The second wave of COVID impacted the quarter fuel sales for the financial year '21, '22. However, the impact is not much as compared to previous year of the first quarter. They were prolonged through localized lockdown of the country. BPCL MS sales were higher by 13.37% as compared to Q1 of previous year and HSD by 24.9%. We registered #1 in quarter 1 among OMCs in terms of the growth for MS and HSD when compared to quarter 1 of the previous financial year. Also, we grew the maximum among OMCs for LPGs at 2.23% when compared to Q1 of previous year. Indian economy assumed to have a revised growth rate of around 9.5% in '21, '22, in which the agricultural allied activity, industry and service sectors are likely to register a growth of around 3%, 12.3% and 11.4%, respectively. As far as MS growth is concerned, the distinct possibility of a third wave of COVID-19, limited public transport and available disposal income will continue to drive personal mobility. So CNG penetrations increasing the EV vehicles is also expected to increase, but freight transport will continue to be dominated by HSD as a fuel. In case of ATF, we grew by 115% as compared to Q1 of the previous year, mainly due to the severe restrictions and domestic freight during major part of Q1 of previous year. Scheduled international freights as are yet to commence, accordingly ATF sales are yet to pick up, and we are primarily focused on the International segment of the business. Strong recovery in U.S. and coupled with improving demand in Asia, including from China and India has led to improvement in MS cracks from around $5.66 barrel in Q4 and 2, $8.05 barrel in Q1 '22 on sequential basis. In case of HSD, reduced Chinese exports balance with good global inventory position has led to moderate increase in HSD cracks from $5.78 to $6.9 on sequential quarter basis. When we compare Q1 of current financial year to Q4 of the previous financial year 2021, the Indian basket of crude has increased from $67 -- to $67 from $60. The rupee has been hovering around INR 74, today's dollar. BPCL's GRM stood at $4.12 barrel in Q1 as compared to $0.39 in Q1 of previous year. The refinery throughput was at 99% of the nameplate capacity during Q1 as compared to 75% during Q1 of previous year and 96% for the full year of 2021. The throughput for both refineries were at 6.84 MMT for the quarter ended 30 June '21 as compared to 5.14 MMT in Q1 of previous year. The refinery throughput have been aligned with the demand in the first quarter due to the severe second wave of COVID. The distillate yield in Q1 of current year is 85.49%, which is almost similar to the comparative quarter of the previous year. For Q1, the revenue from operations grew at INR 89,687 crores as compared to INR 50,617 crores for Q1, mainly resulted from the increase in the volume as well as the prices. The profit of the tax stood at INR 1,502 crore as compared to INR 207 crores in quarter 1 of the previous year. In Q1, we have made a step-up acquisition and acquired the remaining stake of 36.62% in BORL from OQ for a consolidated concentration of around INR 2399.26 crores, resulting in full control over BORL by BPCL. Against the CapEx target of INR 10,000 crores during the financial year, we have almost spent around INR 4,001 crores. This includes the concentration paid to OQ around INR 2,399 crores. During the quarter passed away, we have added 130 retail outlets. We have added 2,444 outlets during the previous financial year. We continue to hold the highest throughput per outlet among the OMCs. In terms of the CapEx, MSBP projects at Kochi Refinery has been fully commissioned. The 2 out of the 3 major units of PDPP at Kochi Refinery, that the acrylic acid and oxo-alcohol has been commissioned and the third unit of acrylates is under commission. Our borrowings as on 30 June 2020, significantly reduced from INR 26,000 crore level to INR 21,577. These are excluding the lease obligations amounting to around INR 7,900 crores. The debt-to-equity ratio as of 30 June at the end of the Q1, has improved significantly and we are at 0.38 as compared to 0.98 in the Q1 of previous year. As of 30 June, we have around INR 233 crores outstanding which we received from Government of India. It is not a very significant amount. And there is no under-recovery for SKO PDS and negligible subsidy in LPG during this quarter. I now invite for questions and for any clarifications.

[Operator Instructions] Our first question is from the line of Anubhav Aggarwal from Crédit Suisse.

Am I audible? I just -- first question was on the other expenses. So compared to the previous quarter, the intensity of other expense in this quarter was a little higher. Was there any one-off in this quarter? Or was there any, let's say, shift trend on the refining of the marketing segment in [Indiscernible]

There is no one-off expenses, mainly if you compare the physicals also improved significantly as compared to first quarter of previous year. Even the volumes have gone up, even the refinery throughput has gone up. So correspondingly, differently, the transportation costs will go up as compared to Q1 of previous year. And the refinery-related fuel cost and other things, purchased fuel cost is somewhat proportionate to Q1 of previous year in terms of when you consider the quantity increase in terms of [indiscernible], whatever sales volume. Mainly an effort of transporting, there is a variable increase, that is -- there is no one-off expenses.

Okay. And second question was on the personnel cost. Staff cost this quarter was much lower. And is this a new run rate for us?

Hopefully, it is a new run rate because after taking the VRS during Q3 of last year, now the number of employees have also come down. Now we are at around 9,000 manpower, 9,027 something as compared to 11,000 manpower in the previous year, we are almost lean now. Most probably, it will continue like this only.

We'll take a next question from the line of Amit Rustagi from UBS.

Yes, Sir. Could you please elaborate, is there any decision being taken on the stake sale in IGL and Petronet LNG before the transaction? Or the 2 entities will go along with the decision?

No, there is no decision taken as on date, but still we are working with Government of India to protect the interest of BPCL, but no decisions in that aspect as of date.

Okay. And sir, will this now lead to open offer in both the stocks given you would have applied to SEBI and some results would have come?

We've not received any response of SEBI. Still we are working with Government of India to protect the interest of the company.

Okay. And sir, coming to the Mumbai refinery. Earlier, we used to plan some expansion here in Mumbai refinery. And with the petrochemical -- integrated petrochemical complex in refinery. So is this project still on or now that is basically will be taken when the new management comes on Board?

Still in exploration stage only that project, still we have to see a lot of things, whether the feasibilities and taking up the new CapEx at this point of time, still in exploration stage only that project, integrated petrochemical complex.

We'll take a next question from the line of Sabri Hazarika from Emkay Global.

I have 2 questions. The first question is relating to your marketing segment performance. So I mean, looking at the GRMs and the overall throughput, was there any -- was there any pressure on the marketing segment during Q1 for BPCL specifically?

No. As such, there was no pressure. If you see last quarter, there had been increase in the prices, which was based on the increase in the costs in the international market. So we have been able to pass on the increases. So there is no as such anything specific to BPCL. Our prices have been in tandem with the market.

All right. And you would not be like disclosing inventory figures from now on, right? Can you give us some sense on how the core performance could have?

No, actually why we have taken this view, even if we see as an oil and gas industry, the inventory positioning is a part and parcel of the entire business. So it is not a correct view to be taken separating the inventory gain losses from the normal marketing operations gain or loss because many of the times what happens if you have any old inventories in your system, maybe you may not pass on the benefit of our consumer. Sometimes if the prices are at a comfortable position, you can add more margins. So it is not right to separate the inventory gains from the normal margins. That is the view we have taken. But however, what we are indicating for Q1, the marketing gains will be roughly around INR 800 crores in terms of the marketing gains, but we don't want to separate these marketing gains from the marketing margins.

Right INR 800 crores of marketing inventory gain roughly, you were saying would be for Q1? Okay. And IOCL generally gives a price lag in inventory adjusted GRM, which they say it's a normalized GRM adjusted for all the discrepancies. So do you have some similar kind of a figure?

Let me explain actually why there is no relevance for core GRM in respect of BPCL. If we see on an average, we keep around 1.5 or 1.6 MMT of crude inventory at both the refineries. Generally, the coverage is around 15 days. When the pricing section of the crude is around 30 days average when we are keeping an inventory of around 15 days, and we are following a future basis accounting policy, I don't think any inventory gain/loss has to be separated from the entire refinery calculations in GRMs, logically it is not a fair approach to remove the inventory gains because our inventory is only around 15 days only. Only those cases at the end of the reporting period, if there is any crude write-downs happen due to a view fluctuations, that we agree, then anyhow, that we reported is an exceptional item. Otherwise, in the normal circumstances, if our inventory is around 15 days, we should not calculate any core GRM separately. That is the reason we have stopped calculating the core GRM. And our inventory levels, we can give even March 21, our crude inventory levels are around 1.53 MMT. And June also it will be around 1.59 MMT. There is no significant changes in terms of inventory position.

Okay. Okay. So enough. And second question pertains to your Petrochemical segment. So the PDPP 2 units you just mentioned as commission. And we have seen your depreciation also go up by 14%, 15%. So has it been like partially expense in the P&L? And was there any income impact from that project?

No, very, very small because still these 2 units are under the stabilization. Generally, any of these large complex projects has requested little bit time for stabilizing, but definitely once commissioning has happened, you have to take the depreciation hit immediately. But otherwise, on the revenue side very significant during this quarter will be less than INR 10 crores only during this year -- during this quarter. But hopefully, once stabilization completes, we are expecting in the next 1 or 2 months, then significant numbers can flow into financials.

And this will be reported as a separate segment, right?

Not yet, because this quarter is very small. We have to review in the subsequent quarter, next quarter how it happens for reporting as a segment.

Our next question is from the line of Aishwarya Agarwal from Nippon India.

Yes. This is Aishwarya from Nippon India Mutual Fund. I just want to understand that how -- I mean, as you people are very conversant with the existing infrastructure and the capabilities of the BPCL. So my question is, there are many, many activities which the company is not able to do because of being a PSU company. But going forward, as we go for this investment and it goes into the private hand, what are the scope of value creation you have in light?

No, presently, even whether privatization continues or not, but otherwise, we have good CapEx projects in pipeline. And this year also, we have taken up a CapEx project target of around INR 10,000 crores and the foreseeable future next year or so, more or less around the same level of CapEx projects we have. And definitely, we are focusing a little bit on the noncore areas, nonfuel businesses. But we are yet to explore on that. But otherwise, we have still good CapEx projects and mainly on the upgradation wherever we foresee any value in the refinery by incremental investment where we can upgrade the product portfolio. Those things we are looking at it. Those opportunities we are exploring. And currently, we are planning our CapEx projects.

In fact, we have 2 projects in MR for optimizing the -- revamping the plans there. One KHT Revamp and Lobs Revamp which is around INR 1,200 crores which is expected to come on stream by March 22.

Yes, sure. And is there any scope of cost reduction?

Cost reduction is a continuous exercise, continues. Every year, we carry out the cost control and part to optimization accesses. So we keep on optimizing wherever it is possible wherever economies of scale is available accordingly. Cost optimization is a continuous exercise.

Sure. I mean, I thought maybe we have some other things, which -- I mean very -- I mean, absolute or objectivity in terms of what kind of cost reduction is possible, I guess, that has yet to firm up. Anyways.

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

I had 2 questions. One was more related to the Kochi Refinery GRM. Is the improvement in GRM largely a function of the startup of the petrochemical project?

This quarter, it is not significantly visible in terms of the GRM improvement on account of PDPP. The PDP contribution is very insignificant this quarter.

This PDPP contribution, as said earlier, is around less than INR 10 crores. And we have 3 units, 2 units has been commissioning and it is getting stabilized. Third unit, you have 2 trains. That is the acrylic units, you have 2 trains, 1 train has been commissioned and 1 is under commissioning stage. So the stabilization process will go on in Q2 also. Post that, we should be seeing a ramp-up in production. And you also have an MSBP project in Kochi, which has been commissioned during the quarter 1 fully.

Okay. So just to kind of get some clarity in terms of how do you think about the utilization rates for the acrylic project, et cetera, by the end of the year?

It would be difficult to give a projection by end of the year at this point of time.

See, these are missed petchem units. So the stabilization will take some time and support from the licensor when it is right now being done virtually. So it will take a little time for the ramp-up to happen. So we won't be able to give any production figures as of now.

Okay. And my second question was more related to if you can give us some idea in terms of your alternative energy plans around gas, EVs, hydrogen, et cetera, if you can just give us what is BPCL doing around that front?

So gas, we have interest in 17 geographical areas where construction is ongoing. In around 8 GAs, we have already started CNG supplies. So altogether under BGRL we have spent around INR 800 crores CapEx. And in the first quarter, it is around INR 150 crores CapEx. And on the EV front, we have -- on a pilot basis, we have started this -- EV charging stations in various states and also battery swapping facility in 2 states. These are on pilot basis and we are just looking at incremental learnings from these facilities.

And also I'd like to add that further in our existing retail outlets, also we keep on adding CNG facilities. So in around 37 number of retail outlets, we have CNG dispensing facility also.

We'll take our next question from the line of Vinit Joshi from Goldman Sachs.

So I just wanted to check what has been the cumulative investment in your petrochemical business now that a lot of the capacities are closer to commissioning? And can you also help us understand what could be a normalized EBITDA that you can generate from these investments, a ballpark number, right? Because this is something which we haven't really modeled. So any understanding of that range will be quite useful?

So for PDPP project, the total CapEx is INR 6,285 crores, which is under commissioning, as I was saying earlier. And the incremental GRM at current prices will be a minimum of $1 on a full year basis. Beyond that, we will not be able to comment on the petchem margins asset.

Okay. So just this will be captured fully in the refinery business, and this $1 is on a overall BPCL throughput, right, including -- as well now or?

This way, you're looking at refinery level.

Yes, at refinery level, but marketing, still we have to get experience of marketing the petrochemicals. Maybe in a couple of quarters, we'll get a good experience of the marketing of petrochemical, then we will be in a better position to tell what would be the contribution in terms of the marketing of petrochemicals. [Refining] broadly, that is what we are looking at it.

$1 is for Kochi or is for the whole of BPCL, sir? And this is net of the cost, right, because your costs will also be going up with the complexity.

At GRM level, yes.

At GRM level.

Okay. And what will be the cost increase because I'm trying to understand at the EBITDA level, what will be the improvement?

EBITDA level will be difficult. But otherwise depreciation, you have seen around INR 170 crores or INR 150 crores depreciation per quarter. But we are not sure EBITDA level. We have not worked out anything at this point of time. But overall in GRM level, GRM at least $1, that is what we are expecting.

Okay. And sir, can you tell us what is your hydrogen producing capacity in your refineries? You must be producing some gray hydrogen. And do you have any plans to convert some of that into green hydrogen or blue hydrogen in the future. Is this something that you're looking at?

Hydrogen, whatever is being produced in refineries right now is being used within the refinery. Also, this MSBP project will also add some incremental hydrogen to the system, which will be again used within the refinery premises. We as such don't have any proposal to market hydrogen as of now. But of course, going forward, we look at that as an opportunity.

Our next question is from the line of Vidyadhar Ginde from ICICI Securities.

My first question is on Bina, if you could share with us the GRM and the profit/loss for the quarter?

So Bina GRM is $5.20 for the quarter 1, and it's a loss of INR 64 crores.

How much?

INR 64 crores.

INR 64 crores loss. Okay. The second question was on -- what is your volume? Have your volumes done in July and if you have some data on August on petrol and diesel, if you could give us some indications?

So July figures I'll share with you. July '21 versus July '20, if we do, there is an increase of 21.50% for MS, while for HSD it is 11.68%; LPG is 6%; aviation is 16%, overall that's it. And an overall basis around 14% there is increase.

Could you compare with -- give us with versus '19, if you have?

Yes, '19 figures, for MS, there is a growth of around 5%. For HSD, it's around 8%.

Still negative?

Yes. And for LPG, it's a growth of around 10%. Overall portfolio-wise, there is a reduction of approximately from 6%.

Okay. Okay. Lastly, if you permit, just wanted to express some view on this sharing of inventory gain and loss. One that, I think most of us, at least, I calculate make our -- my own assumptions, if you don't disclose I disclose my estimates in the report, which I think investors want to know one. So we will -- if you wouldn't give us, I think, multiple analysts will give different numbers in their reports. Secondly, if you look at 3 other peers of yours in the sector, who have also stopped disclosing GRM, 1 of them even stop disclosing GRM. If you look at the stock performance of those 3 companies, since they have started doing, it is not a very encouraging stock performance. Two of your peers and OMC are trading below book values. So I'm not very sure not disclosing will help. I think next time, there is a big inventory loss you guys will probably say this was the inventory loss, otherwise our GRM was so much. I just want to suggest that you should have a relook at your policy. I don't think it is going to really help with investors. Just wanted to...

No, it is not point of actually disclosure and not disclosure, whether how the stock prices will move. What we are having a view, for example, already have explained in themselves declaring for refining side because on an average, any refinery you're holding an inventory of 15 days, I don't think there is a concept of any separate calculation for core GRM when your purchase price is on an average of 30 days basis benchmarking prices. Only any sudden fluctuations may -- if there is any inventory losses for the reporting period, definitely that we reported in the refinery. In terms of marketing, I already have indicated around INR 800 crores. There also we are having a view. It is not right to separate the inventory trading gain/losses from the normal marketing margin. It is just part and parcel of the overall business. That is our view from our side.

Sir, the only point I'm making is that at least some of us will give our own estimates even if you don't disclose. So different numbers will float in the -- amongst investors -- achievements of investors.

Point noted.

Our next question is from the line of Nitin Tiwari from Yes Securities.

My first question is a bookkeeping one, if you can give us the breakup of CapEx in this quarter in terms of segments? And also for the entire year, what are your plans if that can be broken up in segments? So that is one.

Okay. So I'll answer to your question, little. So for financial year '21, '22 for refinery, it's around INR 2,600 crores; for petchem around INR 950 crores; for marketing it would be around INR 3,300 crores. Equity investments in BPRL some INR 1,300 crores, while remaining was for INR 1,700 crores. So overall, it comes to around INR 10,000 crores of CapEx for '21, '22.

Okay. And the INR 4,000 crores that you've spent in 1Q, how is that working out?

Yes. So from that, around INR 24 crores, INR 17 crores is for BORL itself and some small investments. For BPRL, further investment of INR 400 crores. For refinery, it's around INR 450 crores, and marketing, it's around INR 730 crores. So overall, it comes to INR 4,000 crores.

Understood. And my second question is around lubricant sales. So what was our lubricant sale in this quarter? And how did it like perform as compared to March quarter and June quarter last year?

Lubricants numbers as such, the increase is of some 96% in comparison to the last quarter. That is the Q1 of previous year.

Any number that you would want to give in terms of the volume that we sold, quantity, in this quarter?

No, no. Those numbers are not...

Numbers, we can share offline.

Sure. No worries. And 1 more if I may question just please. So let's know when we were planning the Kochi expansion. So at that point in time, the guidance was a consistent one that we're going to see improvement in refining margins other than the petrochemical project also. But what we have observed over a period of time is that Kochi Refinery margin is more on a larger basis or even lesser than the Mumbai refinery margin. So what is the reason behind that? And is that a phenomena, which is going to -- I mean, like continue? And I'm saying ex of petrochemical projects?

If you see last 2 years, actually, due to the COVID, we are not up to the full potential of the physicals. Maybe we have to wait and see once we reach the full potential of the physical, so then we can find out what exactly is the benefit is expected from the Kochi Refinery. And where we are realizing on that. See, there are 2 points. One is the brand [indiscernible] is 1 point. Second 1 is the physicals. As long as physicals, we are not getting the full potential. So we cannot comment anything on this performance of the Kochi Refinery in terms of the project execution.

So when you say you're not realizing the full potential of Kochi Refinery, what does this...

Physicals because due to the demand, still the demand has picked up last year and current year. So once the physicals come back to the normal levels of peak, we have, I think, throughput was 15.8 MMT something in '18, '19.

So throughput to us, and if you see in the first quarter was only 88% of the neglect capacity.

Neglect capacity. So we can go up to 115%, 120% also, we have gone earlier yet. Maybe again after the company's reversal of the COVID impact, maybe we have to relocate it and we can give any numbers on this.

We'll take a next question from the line of Rakesh Sethia from HDFC AMC.

I just wondered if you can help us understand where we are in terms of privatization process and what is the role BPCL is playing as of now? If I understand correctly, I think last quarter, we updated that the data room has been opened and BPCL is addressing some queries. So any update on that would be helpful?

Only update -- as update, we have a very limited role in this entire process. Like last quarter, what we have said the data room would be opened. There were queries we have received from the bidder and the process is going on. We have replayed for some queries and some queries we are yet to replay. So from BPCL side, the process is going on. But all other processors, only Government of India DIPAM mill is only handling. Our role is very limited in this.

Sir, do you -- so when the queries -- does those queries come directly to you from the bidders or it comes via the transaction adviser?

Transaction advisor, he's the middle person. Transaction advisor, any correspondent it will be through transaction advisor.

Okay. And sir, you commented about this inventory gain and losses. And 1 comment you made that crude prices are based on 30 days? Did I hear that wrong? I thought crude prices are taken -- they are benchmarked on a daily prices, maybe you'll have some average, but are we...

No. Our procurement -- if you see our procurement, most of the procurement is on current basis, even spot also, most of the pricing is based on the 30 days average benchmark. So there is no daily price fluctuations, will have my procurement on daily basis. Whatever during the entire month, whatever I purchased, the benchmark applicable prices for the entire 30 days average. So that is the case when we are having an inventory of 15 days. So we did not fail to calculate anything on account of inventory gain/losses and for GRM. Only as I agree, reporting [indiscernible] write-downs we take, yes, we have to report it, that is what we always report what is inventory write-downs if any sudden fluctuations happen.

Sir, pardon my understanding, but if I understand correctly, those benchmarks could be, let's say, Brent or a Dubai, and when the average is being done, anyway those are daily averages, right? So effectively, you're paying nothing but the average price for the month in some sense, unless you have different points of crude sourcing at different point of time?

In fact, that quantity is very small.

My understanding is that quantity is very small. The maximum -- fortunately, we have monthly average pricing only. The part on the daily pricing will be significant.

So the limited point would be -- the reason we ask for inventory gain and losses would be to look at the operational performance which would mean that, let's say, to compare the refining margin, what was the gross margin for any particular asset you would have, we would need to know what was the average realization during that period? And what was the average normalized cost for that period? And I understand that there's a pricing lag and there's inventory lag. So we thought that because ISL was doing in the past and you were also doing it was helping us to get a better sense of the core profitability. So I would still request you that if we can relook at the policy and try to get a better sense of...

Our view is same only because compared to IoT, IoT is the number of this inventory holding maybe differently higher than decision because we have a rollover when we are keeping a 15-day average inventory, and we are following a future basis accounting. I don't think any separate calculation and separating the inventory gain also from the normal of GRM calculation if this is a different picture, I feel. my performance evaluation should be at a GRM level only, and we are keeping around 15 days inventory. That's our view, but we see.

Understood, sir. Sir, 1 last question on the petrochemical. The $1 increase, expected increase in the Kochi GRM, that is just on the refining side, and there would be some EBITDA contribution from petrochemical as and when the volumes would flow. That understanding is correct, right?

Yes, right.

Our next question is from the line of Arun Kumar from Ares Investments.

Yes. I just have one -- I just have 2 questions. First, regarding the GRM, earlier the...

Sorry to interrupt. Mr. Arun Kumar, your voice is not clearly audible. If you're on a speaker mode can you switch it handset, please?

Sure. So I wish to ask like, earlier there were certain restriction on price movements in the earlier months of February, March and supposedly May as well because of the election. So price movements of -- daily price movements were not happening at that time at least. And now the -- at least from the government side, the petroleum margins -- petrol margins are like, you are free to increase the prices based on the international prices. So would there be any GRM gains? And what is your outlook for the coming quarters regarding that?

No. You have to see. You have to see the margin retention and outlook on a longer-term basis. We cannot compare only intermediate periods of 1 month or 15 days. So on an overall basis, we look at it, we can maintain the same similar level of margins on an overall basis for a long-term basis. And [indiscernible] 1 month or 2 months.