Hindustan Petroleum Corporation Limited (HINDPETRO) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Hindustan Petroleum Corporation Limited Q1 FY '27 Earnings Conference Call hosted by Antique Stock Broking Limited. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Varatharajan, from Antique Stock Broking Limited for the opening remarks. Thank you, and over to you, sir.

Good morning, everyone. It's my pleasure to welcome all the participants as well as the management of HPCL. Today, we have Mr. Vikas Kaushal, Chairman, Managing Director; Srividya Venkataraman, Director Finance, [indiscernible], Director refineries; and Mr. K Vinod, Director of Corporate Finance. I have to take this opportunity to congratulate Mr. Srividya Venkataraman on taking charge of Director Finance, and we have all the best in the role. I'd like to hand over the call to Mr. Vikas Kaushal for the opening remarks.

Good morning, everyone. Pleasure coming to you early in the morning on a Friday morning -- hopefully look -- Thursday morning. I don't think it's Friday, but maybe I need the weekend soon. This is our first quarter 1 analyst call. Before I get started, as it was introduced, I'm joined by Mr. Bharatan, Director Refineries, Srividya, who just joined us as Director Finance recently. We are very privileged to have her as part of our Board. And this is our first call, and I'm sure you're going to hear from her now and even going forward. K Vinod you all know from the past and all the other colleagues. I was preparing my opening thoughts for this and that we'll follow the same pattern which we have been doing in the last call. I speak for 5, 7 odd minutes and then open it up for Q&A. So we last spoke on 13th of May. And I was reflecting last night as I jotted down something on what the quarter was, it seemed to me circle of life and twice over in this quarter. It almost seems to have seem to live their lifetime. Why did I make that comment, well, we had the Rajasthan Refinery, there was a high on 20th July waiting for the inauguration an incident on 20 April, waiting for the inauguration, incident of a small fire in the view. We had to postpone it. And then we recovered from that on July 4, we dedicated that asset to the nation. That was one [indiscernible] of life. The second one was on the performance. We spoke on a high of INR 17,175 crores of FY '26 to the negative of this quarter, which I'm sure you have annualized LCM since last evening. That's the second circle of life. These are times we live in. You all have also organized it on actual sheets. We have agonized on it on a daily basis over the last quarter, a lot of challenges. We'll talk about it, but very proud of the way our being ported on a daily basis bravely and managed to keep the supply chain going in times of high uncertainty. At moments like this, we take high and low in our stride and move forward. Coming to the current situation. I will not talk much about it. All of you track it. We know the uncertainty which prevails. Just one benchmark talks about it, what was crude 30, 40 days ago, what was it 20 days ago, what is it now. So that's a highly uncertain situation. It poses 4 key challenges to any team like ours, which is operating on it. First, extreme uncertainty on price. I talked about crude at one point in time you are taking a benchmark is going -- Brent is going into [ 110 and 115 ] , you are buying it in 1.5, 2 months in advance. And then suddenly it drops $25, what do you do with that inventory. And by the time you figure that out, it goes up to $96. So extreme uncertainty on prices and also not only on the crude also on the cracks. So cracks have been less [indiscernible] so they have been consistently high. Second, on an operating basis, we have to take or any refiners had to take a lot of decisions based on availability rather than optimization. So during this period, most refiners, most certainly as could not run the most optimal crudes we would have want to run for assets. For a very simple reason, some of them were on sitting on the other side of Strait of Hormuz. There is no way of getting them out. Sort of nonregular crudes, the idea was to keep the throughput going. And as refiner, which is working, refining and marketing company, which is working to keep the wheels of motion -- wheels of the nation in motion. We have to make sure the throughput was there. So we still have the option of going down of throughput, but we didn't exercise that option. Third, there were demand pressures. If some of you have tracked the industry, there have been spiking the demands. There were days when our supply chain was required to put in 40% more product into the market. Those are not things which are usual. You can all imagine what kind of challenges exist on the supply chain. And last point I want to say it's a constant challenge. Many of us in services industry, belong to that industry often get Saturday and Sundays, I would say our teams don't get that also. And the fact that it is now going for 120 days is not -- it needs a lot of year-end [indiscernible]. Having said that, I will once again reiterate, I'm extremely proud of the HPCL has performed, notwithstanding the numbers. And I know we will get a lot of questions on the numbers. We are ready for that. The augmetion is delivered under the crisis, kept test running and it's managed to keep the customer expectations going. As I said, it takes a lot of effort to manage the prices, and the teams are focused on it. Yet, as we were doing it, we are also keeping an eye on the future and taking some fundamental improvement initiatives. The numbers are all there, and I'm sure everybody has looked at it. I had chanced upon at least 3 or 4 flash reports from analysts I read them and very fair observations by any of you, and we'll address those questions in our thing. What I wanted to cover in the remaining part of my opening dialogue are just 2 things. One, just a couple of the events which have happened in the recent past, and then I want to talk about which I'm sure you want to hear what is our response strategy to the current situation. And even the biggest one was HR. Finally, we have running refinery in Rajasthan, Rajasthan's first refinery. We declared scheduled commercialization on 22nd June. The refinery is ramping up as of now, CDU is running at 60% capacity utilization. And slowly, we will get other trains of downstream units going up, [indiscernible] MS and a lot of other units are there. And likely today, tomorrow, PSC, which is one of the many tenants of the refinery is also going to be in line. And a lot of effort has gone on there. We are expecting the refinery to ramp up to the full capacity in quarter 3 and Petchem by end of the financial year. But the refinery gains and running the CDU at full capacity would be at quarter 3. During this period, we have already tested with CDU at the full capacity run for a period of a couple of days. So right now, we are running it at 60% utilization. Second was an exciting small pilot, but it I wanted to highlight it because it shows you the mindset on what we are operating at. Some of you might have got the news of our latest LG product called [indiscernible]. It was launched on 15th July, which was our 52nd Foundation Day. It's an on-demand premium LPG product sold through new channels, new look of editors, new delivery mechanisms, new channels. In Bangalore, we are piloting it with Swiggy. [indiscernible] parts available in a radius or 5 kilometers, but slowly will be ramped up. In Mumbai, we have started it through our own channel. We expected to hit 5 more cities by 31st July and 25 cities by 31st August, and pan-India will be mostly urban centric, pan India about 200 to 250 cities by Diwali, which is again. The idea is to [indiscernible] some of the people who are willing to look for comfort, who are willing to look for better service and pay a price for that. LPG will be available in a different mechanism, a different more in India, no longer the and no longer you'll have to call people to get an LPG cylinder, you can win the case from your neighborhood shop. There are some other interesting pilots, which we are doing on use of biomass and fuel, I'll not talk of it there in subsequent meetings, we'll probably cover that. Obviously, we have -- I'll come to the second point, which is the risk strategy. You've all seen the numbers as a management team, any such now disappoint. They don't surprise can obviously there's a margin of surprise in the end because of, I would say, inventory write-downs, et cetera. But we knew what was coming, and we have prepared our [indiscernible] strategy on it. There is a 7 pronged response strategy which we are working on, and I will elaborate that at the end of it, then I'll stop and open it up for questions. First is about improving our balance sheet. What gave us strength at this point of time for the fact that last full year, we had improved our balance sheet. Those of you who have been on the books would recall that our debt equity has changed from 1.43 at the beginning of last year to 8 at the end of the year. That give us the headroom to withstand the prices. Right now, it has risen up to 1.5% again, the debt is INR 72,000 crores. And as we speak, we added about INR 1,900 crores a week during this period last 13 weeks. But this organization knows how to correct it. At the Ukraine crisis, that equity went up to [ 2.33 ], it came down to 0.8 about 3 years. I'm very sure it will come down faster this time. And this will be one of our first objectives on making sure we climb down on the equity and create that headroom again. Very difficult to give a forecast given the prices there. But obviously, this is on top of the agenda for Srividya, me and other corporate finance team, which will be looking at it on a daily basis. Second, in response to the time is the CapEx control. As it is, we have set a lower CapEx. Most of you have tracked us for a long time know that we are at a of a long CapEx cycle. Things are starting to fall in place, taking a bit more time than we would have liked in terms of stabilization. But nevertheless, they are falling in place. We don't have to spend that much of money. As a result, our annual target, we release with government open, if I remember correctly, somewhere INR 9,700 crores in that ballpark. In the first quarter, we spent about INR 1,700 crores roughly. And all of that is obviously most of that is essential in -- you still have to spend on turnarounds and you have to plan for your turnaround, et cetera, you have to buy the cylinders all of its growing CapEx. So at this point of time, we are really focused on especially in the short-term money outflow on really critical CapEx. It's very tightly managed and prioritized. If the current situation prevails, we would expect the CapEx to be lower than INr 9,700 crores also. We want to conserve cash as a management team. Third, response strategy is interest costs. With the rising debt, we do have interest cost. So they have been very tightly managed. And last year, you saw how we came down on the interest cost there. Right now, a couple of things we are doing, looking at all kinds of revenues for our parent balance sheet. And also the HRR balance sheet, which is the bigger subsidiary that joint venture debt we have, obviously, leveraging the ECB window, et cetera, some of those things. But the idea is to get our interest cost and control the seriousness of this, you can know from if you track our receivables, you'll see how they have come down and have stayed down. Fourth, response strategy is profitability improvement, making up assets worth more you have tracked us on the Samriddhi Program last year. We came in at where about INR 1,600 crores. I don't remember exactly the split between rate vectoring and onetime, but the recurring ones have already been baked into this year's plan. of course, is what happened in the first quarter, a lot of plans got opiate last minute movements, et cetera. But nevertheless, we have reinitiated after [indiscernible] months in the prices. We have reinitiated some review 2.0. We already are working on 100-plus idea. We have taken despite only 9 left in the quarter or 3 quarters less than this year. we've taken an aggressive target of INR 1,500 crores on a run rate basis. And we are going to aim for INR 1,000 crores on accruals in this, this would come in, in 3 or 4 forms. There is obviously cost takeouts. There is also impress on top line improvement. Again, happy to give you details now or later in the call on one-on-one discussions. And then some of the things we are trying to do more on intermediate movements, which can saturate our refineries, et cetera, better. More on that topic in one of my next response strategies. The fifth one is winning in retail. Some of you track. We are at the end of a marketing company. Very proud that we have been listed in top 20 brands in and down across all sectors from companies. We have continued our efforts on increasing on the retail side. Last year, we talked about retail improvement there. We have done at about 4,500 outlets, wasn't the most successful program as a management team, we would have liked to perform better, but we learned a lot from it, and we have launched [indiscernible] 2.0 at 4,900 retail outlets and we have been at it for last few months. Of course, if I just wanted to give you a metric of volume increase, then without doing anything, my bonding throughput of my retail outlets increased because of the demand state-owned enterprises had on their retail outlets. But we measure apple-to-apple and getting good early results from the measurable set, we are getting about 100 to 150 basis points higher growth on our 4,900 retail outlets. And just over and above the market growth, which is, I would say, the tide rising, but our [indiscernible] outlets are starting to outperform the [indiscernible] in the market. So [indiscernible], we are also focused on nonfuel. It's a small part of our bottom line, but nevertheless, something which starts adding to bottom line, and we are very hopeful by this March to start seeing this as an additional line on our P&L in terms of contribution. The sixth area is refinery improvement. That is obviously one of the biggest ones. We do have headroom on our refineries to improve further. There are 3 or 4 things which we are aiming at. first, in the next 3 quarters as our refineries sort of settle onto the new paradigm. We are going to be increasing sourcing for our internal things. One of the things which has hit us this quarter is our need to satisfy our marketing footprint by buying from third-party players, that dependence is going to slowly reduce. In fact, if I count my own refineries and the joint venture. By end of this year, I would be almost self-sufficient, maybe surplus on some products by taking in total of my own refineries and joint ventures. Two major efforts on this, as we talked about HRR ramp-up. And I'm sure there is -- you want to have questions on RUF. That also we have been in the process of stabilizing. So RUF technology -- we've had a couple of, I would say, unexpected technological challenges on it because it's a high pressure, high temperature kind of a situation, dealing with tons and tons of capitalist becomes difficult. But we are mastering that art slowly and this will start giving us both product and consistently addition of the bottom line. In an essence, we are making our assets work more. Our turnarounds are much sharper to finish bang on time now. We are making a very concerted effort on energy costs because between the 2 refineries on our balance sheet, we probably will be spending close to INR 2,000 crores or even more crores on energy. So that's one effort is actually much more retirees and losses. That's 1 effort we are doing. And I talked about intermediate stream leverage. There are some interesting experiments we have done on buying intermediates to satisfy some of the units where there was potential to look at it. So whether it is VGO or iGas, we have been making those efforts. Last but not the least, the 3 refineries fully working and then in joint venture of HMEL in the fold, we are looking at even crude optimization across our refineries not more, having a significant storage capacity at Mundra for HRR gives us the flexibility of doing innovative things like bringing in VLCC there and shipping it to Mumbai in a different fashion. So there's a lot of effort going on, on our refinery performance. The last but not the least is the effort we've been talking about is on the digital side. Again, it's not only about just the fancy world of AI, but it's hard core using digital to improve efficiencies. In the -- we've been talking in every quarterly call, from the last time to this time, we have launched the supply chain optimization solution. We're working on it. This will help us optimize our movements much sharper in state-of-the-art tool. A lot of digital and analytics use cases are being worked on and focus is on efficiency measures. So those were the 7, I'll recall, improving our balance sheet, CapEx control, lowering the interest cost, profitability improvement program Samriddhi 2.0, winning in retail, refined retinization and improvements and digital. How do we look at the future? As the management team, we look at the future with a lot of confidence. I can look at the last quarter and so there is this negative. That's fine. It is there. I can't do anything to do it stage, but we are very confident of our future, a lot of foundational elements, some of which we have done, some which you will not talk in this call are in place. The one we will not talk on the world to see them down the line and some of you guys have find it out yourself on how this happened. But we look at the future with a lot of confidence. We will be turning around our current situation, hopefully, by the time all second call happens, you all would be happier with the numbers. We are coming out of the crisis stronger with a more balanced portfolio and hungrier. That's all I have to say in my opening comments. Thank you for your patient hearing and also the continuous interest in HPCL. As I said, keep your detailed report saving even if you close up for all of them are very valuable. I did mention earlier ordinary ports which came away on [indiscernible] last night, the flash report, I personally got through all very interesting comments with the analysis. So I keep that coming and of course, we're happy to take questions now me and my team. And also, if anybody wants to meet us later, we are more than happy to meet you separately later. Thank you, and over to Varatharajan and the team for operating the call.

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

I just had a couple of questions perhaps from a set near-term perspective. You had I think spoken in detail last quarter in terms of the sourcing that had increasing the kind of number of fees of the country. Can you just get us in given the flare up in the crisis again, how you are looking at sourcing Q2, I assume what have anyway has been mostly tied up at this point of time. But looking forward to Q3, are you facing any fresh challenges in terms of the ranging for sourcing given what is happening in the Strait of Hormuz right now? And what's the strategy? And what's the kind of mix if you can throw any color in terms of how your crude sourcing is looking at specifically now that your Rajasthan refinery is also endemic. So obviously, our 2 requirements have gone up to that extent.

Yes. Thanks, Probal. This is a dynamic time and just to be very predictive on what we are going to do on sourcing very difficult. Just to give you a sense, at the beginning of the year, we do always do a term and spot mix. This time in the first quarter, we hardly got anything from our 2 contracts because a lot of the term contracts are sitting on the other side of Strait of Hormuz. Having said that, we are very well covered for our crude till end of August only. In fact, yesterday, we were starting to buy for September, there is always barring one cargo, which is take at all, but those are operational things we are able to -- and the first stocking of crude only, then I'll talk of LPG itself. I think crude availability is not an issue. Pricing, of course, goes up and down and it's very difficult to handle given -- you're always buying dated rent and 5-month pricing or 2 months buyer pricing. So less of a channel on crude sourcing. So we don't anticipate an issue on crude sourcing. There is enough crude which is available. In terms of mix, I think with what is happening and movement HRL is at full steam, actually, the mix plays more into our hands right now because if you look at it, both of our bottom [indiscernible] still stabilization phase, as I said, and Rajasthan will delay coker has started, but a couple of units have to get on stream for us to get there. But moment roughly stabilized and HRR or is fully at full capacity on the refining section. We actually will be even more stronger position because we can buy even the [indiscernible]. So on crude, not an issue. On LPG, I think it's once bitten twice shy. All OLTs have worked very hard to diversify the mix. One of the things -- preprices, all of our ships used to be looking at Strait of Hormuz and buying a turning up and down there, we've been buying a lot of cargoes from U.S. and other places also. So I think LPG is much more -- I think we have learned the drill. There is a lot of market memory how I want to do that on how to do it. Of course, the situation is very dynamic. Things for [indiscernible] all over is a difficult thing. So we'll adapt that but I'm not worried about either LPG of crude at this point of time. Pricing, of course, is a concern.

Got it, sir. And with respect to just the inventory movement that you mentioned, it's fair to assume that there would probably have been a negative inventory impact in the quarter, both for the refining and marketing segment. and that will probably reverse in this quarter given the kind of spike you're seeing in prices? Or it's too simplistic to look at it in that way at this point of time.

Yes. I think part of the statement is absolutely correct, Probal. We did have a significant amount of inventory. And also -- 2 things happened in this quarter. You should remember that it was very uncertain is to secure more inventory, at least we carried more than usual inventory with us. That was a conscious call we took because, as I said, we were first looking at keeping the throughput going. So -- and also during the month end, some cargoes which are stuck in landed. So we did carry more crude into our tanks on 30th of June. Obviously, there is a write-down on those given the -- where the prices are. And I can say who you would have anticipated that drop. But I'll be wrong in saying if I would have thought the crude will drop $25 in a matter of 2 weeks there. So to that extent, there will be a diverse some automatically. How much? Very difficult to predict because it's now again going up at $95, so goes to $120, the different reversal, if it was down to $75 as a different thing. But in July onwards, we are carrying a reasonable amount of marks down -- we did carry a lot of markdown crude. So July, we have been running markdown growth. it.

Sir, one last question, if I may, just a housekeeping one. What was the LPG loss on a per cylinder basis for the quarter? And what is the kind of level we are seeing right now next?

I don't have the quarter number. June, it was [ 60 per cylinder ]. July dropped 40 per cylinder. In the quarter, since my team can review to you later on that. I just have the June and July number with me. [indiscernible] giving some additional numbers. [ 510 ] was the whole quarter, 3 months. For the 3 months, it was [ 510 ] for cylinder loss.

The next question comes from the line of Puneet Gulati with HSBC Bank.

Great effort on managing the supply chain in these tough times. My first question is, if you can help me understand how should one look at the refining margin, which you face without the SAD impact. Will you transfer it within the firm from your refinery piece to your marketing piece? Do you adjust for an impact of SEB for transfer? Or is it full price? How should I think about this?

Yes. This is adjusted for SAED. So the report numbers are adjusted plus SAED. Sorry, Srividya is just giving an additional.

[indiscernible] want refinery transfer to the marketing, it's done after writing down the SAEd. So it's net of a [indiscernible]

Okay. So even you transfer it is in the domestic universe, it's ex of impact. Okay. And secondly, on the product side, there was this price increase on petrodiesel. Would it still have resulted in marketing gains? Or is that still counted as at the same price?

For the whole quarter, there is a significant under recovery on this. This has been said is even on the public platform by a lot of people, and including high ranking common option. So there has been a significant there, just to give you a sense, the marketing under recovery for the whole quarter was upwards of INR 20,000 crores, 20 of which was -- and these are rough numbers, was on MS and HSD put together and about remaining was on LPG. So it was a significant under recovery for the whole quarter. We were every later which you and I were buying from petrol pump was being subsidized by one of the [indiscernible]

Understood. And can you give a sense of -- obviously, the pricing has moved up again? Is there still significant under recovery at this point of time? And if the account or a combined margin, are you in a better state in a positive territory at your refining spread with your marketing loss?

Yes, I think this is a very, very dynamic situation. Just in the last 3 days, the crude has gone up 3 working days. It's gone from $85 to $96. So it's a very difficult one to predict and as it is, we have not given too many forward-looking guidances, though we gave some last year. But this is the least fine management team, we would want to give forward-looking guidance. Having said that, I will say that we were happier with July. We hope we'll be happier with August and I would say no point getting into specific numbers because you guys can do your own backward calculation. We are very smart around it. But -- it's a very dynamic time before we speak to more anybody caught the news today on Saudi product tanker is on fire and the [indiscernible] have done that. So that's at least floating around in the media. I don't know whether true or wrong. So it's a very dynamic situation. Crude go $100 tomorrow, it could drop $10. So we'll have to take it as it comes, but we're happy with July.

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

So firstly, on the quantum of the inventory movement, would you be able to ballpark provide that to how much was lost at crude or marketing?

See the same question Amit was asked last time. Again, you leave that with us as a number. All I would say, and I made the statement earlier, we were carrying higher crude inventory and we also are keeping sufficient product. So in a normal situation, I wouldn't have carried that much of crude in my tanks, which I was carrying on 30th of June course. We were apprehensive that war could go anywhere all the time. So it is a significant number. I'll give you one more you want to kill me after that. But if you net it off, the loss number would have been on the other side of [indiscernible] good margin, remaining you can calculate yourself.

Got it. And on the Vizag bottom unit, you mentioned that you faced some issues with catalyst handling and also -- when do you think you'll be able to stabilize that rate and start contributing fully to margins?

So at 8:45 today morning, my Head of Refinery told me that he is hopeful of getting it stable very soon. I don't know whether you're waiting that question at here, that's the first call I make when I leave home. So get to work. The part, I think, let's also recognize that it is a very, very technically complex asset. I've given this in the last call also. Imagine running something at 380 bars at 400-degree temperature. And I told last time, just to see how powerful that reaction is the walls of that reactor or 25 centimeters thick. So it's a challenging situation. We are learning the art of doing it. Even [indiscernible] technology provider has not run it is the first thing they're running a unit this large there. Again, it's a technological leap as [indiscernible] taken. The good thing is it's an engineering problem. I mean general problems can get solved more easily than financial or pricing problems. Our team is working on it. We are getting faster and smoother. We are hoping to have good run on that in this quarter itself. And in the next quarter itself, hoping to have it fully stabilized there. And I even open [indiscernible] will be coming to us and making our hopes get realized. If you start to give us a significant thing, it will also, as I said, significantly shift HPCL with HRR and Vizag rough coming fully on stream. So -- on a run rate basis, third quarter onwards, I would hardly be dependent on anybody except my own refineries and my JVs for diesel. And I'll probably need only 10% and it's from anybody else. So we are in that phase where we are really hoping our assets to start working on it. And as I'm impatient for RUF to get started soon. But as a practical person, I have to give my team the entire space to get it running and learn the technology. We'll get there. We are very, very confident about it.

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

Capital expenditure side. INR 1,734 crores kind of a CapEx during quarter has seen a sharp reduction on the sequential basis. Could you please share the number that expected CapEx for FY '27? And in addition to this, suppose the FY '27 CapEx might be on a slower or lower side considering that kind of higher end recoveries on the oil products, which segment of our company like Refining, Marketing, Pipeline or CGD will hit on the CapEx side? Any broader understanding if you could provide?

Yes. I think I gave the understanding on the broad numbers. We said INR 9,700 crores was the target we had taken for the year. We expect it to be lower than this. Obviously, we will react to the environment as the thing is benign in the next quarter, we will spend some money. If it is not benign, we will conserve that money. And INR 1,700-odd crores which we have spent right now also includes a lot of money which has been spent on buying equipment catalysts, et cetera, for the upcoming turnarounds, which are absolutely essential for keeping our refinery running. In fact, all of the refiners have been dealing turnarounds in the last few months to keep the product flows going. Which segments, I think a lot of it is around discretionary things. things we would want to do more, like I can always upgrade 200 pumps in the year. I can upgrade 1,000 pumps in a year. If I have more money, I will upgrade 1,000, it has less money, I will update 200. On the refining side, the major CapEx has already been done. There are a few projects going on. But for a company of our size, spending INR 4,000 crores, INR 5,000 crores on a 4-year, 5-year Panprojects not too much of an issue. There will be periods where we can accelerate that spending. There are other things that we can spend in terms of, I would say, administrative expenses, upgrading some of our infrastructure. Those things we can just postpone, we can do it 1 quarter later. So that's something the management team will take a call on. But nothing critical will be starved of funds and yet the discretionary spends can be pushed back a bit.

Okay. touching to the same, any number you would like to share with us for the FY '27 CapEx? And secondly, sir, India has oil SPR reserves of around 5.3 million metric tons. Was it available for all of these oil marketing companies or any refiner during the Q1 FY '27, considering ...

All results all things were available to everyone. And all I would say not only HPCL, every single refining company, a marketing company, private and public collaborative collaborated extensively during this period to get the country out of the crisis. The amount of collaboration, which happened, I guess none of you can even imagine. So [indiscernible] are available, our own infrastructure was available for other infrastructure was available to us. If I was running short of something somebody else is helping me if somebody else was running short there. It takes a lot of people to work together to get over a crisis like this. It was a non-trivial situation, many nations bulk under it, but we came out of it because all our companies, whether it is standalone refiners, whether it is private sector refiners, public sector, all of them worked very, very hard on this. On CapEx, I've already given you a number. Beyond that, as I said, this call is not about giving any guidance. We have stayed away from that. We have said we want to spend INR 9,700 crores, if there is less money on this year, we will spend less than that.

The next question comes from the line of Nitin Tiwari with PhillipCapital India.

Sir, my question actually was related to your refinery models. So yesterday, along with you, [indiscernible] also reported their numbers. And the refinery margins have been very strong as compared to our pending margin. So I just wanted to understand that backdrop, right, that what was our [indiscernible] to the significant variance between severely sized sort of peers in consol refinery margins. That is one. Secondly, I'm [indiscernible] comment on what stabilization and other challenges that we're facing in Vizag perhaps could be impact on the refinery margin, but I was looking at the data for the last 20 quarters, which is like a last 5 years, right? In this period, we have really reported refining margins better than our peers, [indiscernible] BP. I'm not even convert with the refinery matsuri per rig. So what is that like is leading this challenge in terms of our refinery operations where our refining margins are consistently lower because in the past on we've guided for like margins to return better with expansion of capacity advisor and so on and so forth. So your comments on that, and then I'll ask this question.

So I think on comparisons, PCL I'll leave it for you to do, not my job to compare with its except the phone [indiscernible] PCB exceptional performance, thereby proud of turning out what the numbers are. But I have not spent time trying to dig through what were their refining margins. I have enough work on my hand to do on what are my reading merchants and where I want to be. So I leave that comment on [indiscernible] to handle. But remember, they have a higher refining capacity than we have and there are structural things. Refining is not just an easy talk do it's a complex thing. On your second thing, I would turn the clock forward 1 year later, you should ask me the same question on the same call, and you will have an HPCL asset, which will have the highest margin. See, the margins are generated by the assets we have. And if you understand refining and go deeper into that entire thing, you will understand, there are like if I do not have a dealer coker in my Mumbai, I will not get a refining margin or uplift, which another refinery, which has a delayed coker, which will have, but I have a deal [indiscernible], which is already working in HR well, I will get that uplift out there. Second, our uplift on RUF will happen -- that will happen. That will take our digit yields up from what it is right now to but there is also a structural disadvantage RUF has at this point of -- Vizag has 2, if I compare it to the West Coast refinery that can ease of course. You always have to carry more inventory in East Coast. The crudes are more expensive on the East Coast. That refinery also does not have natural gas right now, which my other refineries have. So there are -- it's not just an apple-to-apple comparison that if you look at one reported number and compare it with other and say, this guy is good and this guy is bad. You have to look at what is that guy is capable. I have 2 kid, if I have 2 kids and one is capable of tracking IoT. And the other one is not capable of tracking it. Should I say that the second kid is bad? No. have to look at what is that capability and what is that gap performing on that. Having said that, we understand we need to improve that rating and we are on track to improvement on that.

I hope I've asked quite Yes, sir, actually, what I was trying to get at is that, as you rightly pointed out, is a larger capacity, right? I mean, in terms of finding. So naturally, they would also be carrying a larger inventory. While we were carrying more inventory than we usually can but I suppose it also in I'm not getting into specific numbers.

You have to go the analyst call that, not ask me questions on this.

I'm not asking that question on EPS. I'm just trying to understand the difference in the operation of refinery, we could have letter Andrea, if I take your answer for that -- and basically, I also wanted to understand this quarter for your primary margin somewhat in detail. So when you say it's before [indiscernible]. So if we build in the impact then what would be a tiny margin to look at? And if you can give us -- I mean, I understand that you dont want to give an extruder refinery inventory losses, but a ballpark number around per unit basis would be helpful for us [indiscernible].

Yes. So I think you guys are all smart to calculate SAED impact yourself. If you will help on that, you can always speak to my corporate financing and the team, they can help you understand the SAED impact the way you look at -- and what was the second part of that question? Inventory I've already said what I have to say, I will not say anything further on inventory.

The next question comes from the line of Sumit Rohan with Smart Sun Capital.

So firstly, I mean, I have to congratulate you. It's a very tough environment that you guys have basically been functioning on and kept this more important kept this country like I mean, sir, one thing, it's clearly the fact that the private guys were basically in terms of market share, also small, but what you have done, I mean, all the 3 of you have been totally marvelous. And I'm sure that the country is definitely indebted to you because you've kept the wheels of the country running. Now sir, my question to you is that the matter of fact is that you've done such amount of work your balance sheet has taken a hit. And of course, again, you have done this for the country. I mean, there's absolutely no question on that front. Like we've seen that our LPG today under recoveries or whatever the negative buffer account is about INR 16,000 crores. And your marketing also has been subsidized for the best interest of the country. which is nearly to the tune of INR 20,000 crores has been highlighted. So sir, I'm sure that that government is obviously aware about the sacrifice, which basically the company is making. And obviously, the sacrifice also comes from its shareholders, right, because the economic kits of the shareholders also that stake. So with the great amount of work, a lot of the title work that you guys have put in and the financial hit we've taken and with INR 36,000 crores of under recovery, which you just faced in 3 months, it is staggering. But can we expect that we can expect a substantial amount of government support because this is done for the country itself. Can you please share, I mean, if at all possible, your outlook for this financial year? As you said, it's a circle of life, '22 also we faced a similar period, come 4 years ahead '26. So I'm sure what you've done is a [indiscernible] job, and I'm sure the company is becoming stronger and stronger. That is clearly evident from the refineries from the physical throughput from the physical outperformance, which you guys done -- but sir, from the financial point, it would be very interesting to get your perspective in that. And I'm sure the government looks up to you guys for the big work we're doing.

Thanks, Amit, and thanks for your kind words. On the aspects on how I think many -- first, it's not my brief to talk on what the government is going to do. I think there's a different set of people who should be talking on it. So the question probably [indiscernible] at there. Having said that, if you read -- or there's been a lot of talk and government's been talking about the fact that there was a way things that happened. And there was something which was done to keep the wheels in motion in this time. So I'm sure all those things would be taken into account. They have been taken into account in the past. And I'll draw your attention on to what was said at the Analyst Meet in Bombay last year, where the Ven Secretary and also the honorable Minister actually talked about saying that how -- the fact that these assets are all works of keeping the wheels of the mission in motion. So a lot of I would say, support is there in different forms. What specifics, this is not the right forum to talk about that. What's our outlook, as I said earlier, very difficult times to predict the outlook. You guys have been tracking this oil market for years, you will know -- Probably you never have seen the extreme volatility, which is occurring right now. So there as for high prices, they have been are of $20 prices also. But the spikes and the trust, which are happening, the frequency of the volatile nature is kind of unprecedented. And that has its own set of challenges in giving guidance. Having said that, we are very bullish about the future. Why? 2, 3 things. One, we believe a lot of homework has been done some obvious, some not so obvious, some giving results right now. Some will give results in the future, which make us a stronger company. The fundamentals of the company are being worked upon. All of us are together in it and everything which is there, work on it. And just there's a simple thing while we did not share and it used to comment on PCL. Our teams have been analyzing everything said because we also want to see there is an improvement area in us. And not only us, we are looking at every single results which have been declared to find out our improvement areas. Similarly, I talked about a lot of effort going on in the marketing side. We talked about the new LPG launch. All those things are make the company stronger in the long run. I hope benign conditions come. If that looks at it, I would -- no management team ever wants red quarter or a red year. We are also a team which are very proud, and we will also not want to have. Third quarter, we cannot avoid at this time, but we would also not want to a red year. So that's all I would say on the Sumit, hopefully, quarter 2, the results would be better, and then we can be more sure about where the year is going to end, but very difficult to predict at this point of time.

Okay, all the very best because the only reason I brought this point up is because today, the market cap of INR 80,000 crores, clearly is not justified for the kind of valuable assets which the company owns, right? Today, our plant in machinery values INR 1 lakh crore, whereas we are valued at INR 80,000 crores. So it just absolutely observed valuation. So that was the reason I just probe any way wish you the best of luck and to you and your entire team, sir.

The next question comes from the line of Abhishek Nigam with Mutilan Oswal Financial Services.

Sir, just 2 questions. Sir, what is the landed cost today for crude? So if Brent crude is $90 then what will be the landed cost in India? So that's my first question.

Difficult to answer in any way because it will depend on where you are buying what crews you are buying because you could buy an extremely light low-sulfur crude, which is at a premium to Brent. There are other things that could be a seller, which is -- [indiscernible] wants to get rid of a cargo. So it's a very difficult question. If you ask me what is my [indiscernible] I'm buying from my refinery right now, I won't be able to give you that number also because it varies factually from crude to quote there. So my suggestion is from your calculation purposes just look at averages rather than getting deeper because crude buying is also there was 200 different type of crude floating around in the market.

If you take Brent, for example, if you are buying Brent, -- is it fair to start the shipping and insurance? And is there some average number that you can get $3, $4 in terms of...

You need me to react to oil prices. I have -- I was just thinking as you're asking my question. I have no way to give you and I'll [indiscernible] open to lighting if they have any better guesses because even in these prices, there are times when you have picked up crude, which are discount to the Brent, there is some other crude at a premium to the brent. Every crew goes in at a different thing. They are finite same today that crude is at a premium to Brent. Two weeks later, that is actually at Brent, 1 week later, it might be a minus to the brent. And everything is shipping and all is very standard. There is more, of course, shipping a pent-up in the recent past, but that's a standard thing. So I'm not evading that it's just that I don't know how to answer that question. I wish I had that straightforward answer to that.

Fair enough. And sir, just one last question. Sir, last quarter, I think in June, there was a $20 premium on LPG buying. It was a spot premium. Is there still something like that prevalent today? Or has that completely gone away?

I think two things happened. One, the Saudi CP price, which is one of the market has come down. by about 200 per metric ton. The second, as a reaction to the crisis, we have also diversified our LPG procurement mix. So there are -- like last time, we were almost in the call also said that it's been said in public domains by a lot of people that we were all dependent upon 90% on LPG coming from other side of Strait of Hormuz, of that dependence, of course, it was not available. But even otherwise, there is a systemic diversification which is happening, there are Indian time charters, which are going to U.S. to pick up cargoes, which never happened in the past. Now because of the diversification, I'm less dependent on the spot. And as a result, the spot prices have cooled down there. Now I don't know what is today after the data sets, which has happened. But [indiscernible] have pulled down a bit. And also we are much more resilient in the way we are buying right now.

The next question comes from the line of Maulik Patel with Equirius Securities.