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Ladies and gentlemen, good day, and welcome to the Bharat Petroleum Corporation Limited Post Results Conference Call hosted by SBICAP Securities Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Dayanand Mittal from SBICAP Securities. Thank you, and over to you, sir.
Yes, thank you. I welcome you all to the call. We have with us the senior management team of BPCL represented by Mr. Vijayagopal N., ED Corporate Finance. We have with us Mr. R. Rajamani, ED Corporate Treasury. We have Ms. Theresa Naidu, CGM Pricing and Retirement Benefits; Mr. V. Rama Krishna Gupta, GM Corporate Finance; and Mr. Ganesan Jaibal, Senior Manager of Pricing and Insurance.So without -- with this, I would like to hand over the call to the management to take the proceeding further. Over to you, sir.
Thanks, Dayanand. Good afternoon, one and all. Before we begin, I would like to mention that some of the statements that we would make during this con call may be forward looking in nature, and we believe that expectations contained in such statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. These forward-looking statements represent only the current expectations and beliefs, and we do not provide any assurance that such expectations will prove correct. Our results were published yesterday, and we had circulated the handout containing the major highlights immediately thereafter.We have closed the Q1 FY '19 quarter with a profit after tax of INR 2,293 crores as against INR 745 crores in the comparable quarter last year. Profit before tax was higher at INR 3,382 crores for the quarter as against INR 1,114 crores for Q1 FY '18. Earnings before interest, tax, depreciation and amortization, that is EBITDA, amounted to INR 4,423 crores for the quarter versus INR 1,882 crores for Q1 FY '18.Major capitalizations under IREP have been completed in the previous year, resulting in higher depreciation and noncapitalization of borrowing costs. Hence, depreciation and interest both were significantly higher than the comparable period.Gross under-recoveries on sale of SKO PDS were at INR 250 crores for the quarter as against INR 197 crores for the corresponding quarter last year. Net under-recoveries after accounting subsidy have been 0 for the quarter. Advantageous gain on inventory for both refining and marketing sections amounted to INR 2,679 crores for the quarter against a loss of INR 1,348 crores for the same quarter last year. Out of this INR 2,679 crores, INR 1,275 crores of inventory gains pertain to refining section and INR 1,404 crores pertain to marketing.CapEx for the quarter has been at INR 2,618 crores. Our earlier guidance of INR 7,800 crores CapEx for the full year 2018, '19 continues. We have been able to continuously increase the proportion of high sulfur crude, especially at Kochi. For Q1 FY '19, the quantum of high sulfur crude was 95% of the total crude consumption at Kochi as against 58% in the same quarter last year. Combined high sulfur ratios for Mumbai and Kochi are 72% for the quarter as against 50% in Q1 FY '18.Our refineries throughput for this quarter stood at 7.74 million metric tonnes, which is about 21% higher than the corresponding quarter in the previous year. Mumbai refinery's throughput was higher than Q1 FY '18, because of the base impact due to plant shutdown in March, April 2017.Kochi refinery's throughput was higher than the comparable quarter due to incremental capacity brought in by IREP. Kochi's throughput at 3.96 million metrics tonnes for the quarter is at 102% of the installed capacity of 15.5 million metric tonnes per annum.Our weighted average GRM for the 2 refineries for this quarter stood at $7.49 per barrel as compared to $4.88 per barrel for the same quarter last year. After knocking off the impact of inventory gain, the adjusted GRM was at $4.15 per barrel as against $6.87 per barrel for Q1 FY '18.On the market front, we are happy to inform you that we have had the highest growth rate in volumes in major products against PSU oil companies. Our growth rate for the quarter in domestic sales was around 9% from 10.04 million metric tonnes to 10.97 million metric tonnes.The growth was mainly led by petrol around 6%, diesel 3.5% and LPG 11% and ATF 26%.Exports during the quarter are at 0.31 million tonnes as against 0.49 million tonnes, mainly due to reduction in crude production and export of furnace oil at Kochi.Our market share among PSUs for Q1 FY '19 in MS has been 28.58% versus 28.81% in Q1 FY '18.In HSD, our share has increased from 28.56% in Q1 FY '18 to 28.80% in the current quarter.We are now open for the question-and-answer round. As this is the post results conference call, we request you to kindly restrict your questions to the quarterly performance, please.
[Operator Instructions] The first question is from the line of Rohit Ahuja from BOB Capital Markets.
Sir, the GRM performance has been lagging and even after the Kochi expansion had been completed from the expectation that was set about a year back, could you please guide us how do we see the GRM for Kochi panning out? And when do we see the whole potential post-expansion to be visible?
Rohit, the expansion, as you rightly said, has been sort of completed as evidenced by the capacity or the throughput that has been delivered. So essentially, all the units are now running at 100% and the refinery over the last several quarters have been -- has been trying out multiple or new types of crude and which is why we are seeing the percentage of heavy and sour crudes significantly increase. In fact, the heavier crudes have been processed and this is something, which has been going on. And also, as we speak, the -- one of the things, which was also important was the propylene unit, which would have also added to the GRM, which will come in once the petchem project is commissioned early next year. Now during this period, in the absence of propylene, the refinery has been trying to take some opportunities to increase production of MS and diesel. And also in terms of the fuel and loss, it's slightly on the higher side. So these aspects have all been identified, and somewhere in October, they are expected to take the mandatory shutdown, which will be about a year after the units having been commissioned. So that will give them an opportunity to fine-tune and optimize some of these units, which in turn will help in sort of further giving some upside to the margins. But finally, the efforts are continuously on in terms of getting the potential return. So yes, we are working towards achieving the full potential, which we expect over the next few quarters to be visible. But in particular, the commissioning of the petchem will also be a major event.
So you're saying from Q4 or second half of this year, we could see...
It's an ongoing process, but having said, -- what I -- it's an ongoing process. But important thing is, in October, November, during that period, several of these units will go for a mandatory shutdown after one year, that will give them an opportunity to optimize, fine-tune some of these units, which in turn we expect will also help in sort of some of the parameters, which has been observed during the stabilization period to be fine-tuned and that will also contribute to the margins.
Right. Secondly, on the unfortunate fire incident yesterday at the Mumbai refinery, I assume there will be a shutdown of this facility for a few days. Could you help us in understanding the extent of the shutdown that could be and when do we see the normalization operations at the Mumbai refinery happen?
Rohit, as you would appreciate, this was a unfortunate incident. This just happened yesterday. So the immediate focus was on bringing the whole situation back to control. So the fire was controlled by -- within about an hour or slightly less than that and finally put out early in the morning. Now they will be in the process of evaluating and assessing what has happened and that will give them a sense of what exactly will be the way forward. And then we will have some clarity in terms of that particular unit because we are talking about only that one single unit. The other units are operating normally. So we'll have to wait for some more time before we get a sense of how long that unit will be impacted.
Next question is from the line of Bhavin Gandhi from Batlivala & Karani Securities.
Sir, could you share the Bina and NRL performance, please?
So as far as BORL is concerned, for the quarter, the profit after tax was INR 393 crores as against INR 146 crores last year -- corresponding period of last year. The Bina refinery has done a gross refining margin of $15. This obviously includes some element towards the inventory differential. This is as against $8.9 in the corresponding period of last year. The crude throughput was 1.72 million metric tonnes as against 1.77 million metric tonnes last year. As far as NRL is concerned, the gross refining margin will be -- excise duty impact is around $30 per barrel and the throughput was 0.68 million barrels. The profit after tax was INR 758 crores as against INR 567 crores last year.
Next question is from the line of Pinakin Parekh from JPMorgan.
Sir, my first question regarding the ForEx...
Sorry to interrupt, Mr. Parekh, may we request you to please speak a bit loud. Your voice is a bit faint.
Yes. Just on the refinery, on the ForEx loss that we have seen, INR 443 crores on the crude and the rest being the liability. Sir, when we are looking at the GRM number of roughly the blended GRM of 7.49 or the adjusted GRM of 4.15, this is after the ForEx fluctuation is accounted for? Or does it come after the GRM line, sir?
Yes, just one minute. Mr. Gupta will just clarify it.
The foreign exchange [indiscernible] or the GRM is before the impact of the foreign exchange loss/gains.
Understood, understood. And, sir, second question is that the $2 uplift on Kochi refinery that we have been expecting from the modernization and expansion, does that include the petchem unit? Or is it before the petchem unit, sir?
We’re talking about the propylene also being produced, which is the raw material for the petchem. So, therefore, when we talk about GRMs of Kochi, we are talking about including the propylene as a feedstock. We are not talking about that including the petrochemicals margin, which will be separate.
Okay, understood. And, sir, lastly the CapEx guidance that we have, that I believe includes the upstream CapEx as well, right sir?
It's the regular upstream CapEx, it includes that. INR 7,800 crores, which Ganesan spoke about, includes the upstream investment. Obviously, it doesn't include the big ticket items like Mozambique and all, that will be included as and when it gets firmed up.
Next question is from the line of Amit Shah from BNP Paribas.
Just couple of questions. One, I think you already addressed this, but I think I missed it. But how long before we actually start seeing the benefit of Kochi because -- and how long do you think the stabilization and trying out different crude blends to get the optimal mix will last before we see the benefit that we've been waiting for a while now to see? And also on the -- and this quarter's subdued performance of Kochi refinery was just completely attributed to that, to the fact that we're still trying to get the sourcing, right?
As far as stabilizations concept, Cochin’s stabilization is actually comparable with the best stabilization that has happened and will be engine refineries of this magnitude. And we will have to wait for some more time to get the full results coming in the financials. As Mr. Rajamani was explaining, we're going for a shutdown in the month of October, November, which is expected to substantially increase the efficiencies, which are expected to come out of the expansion plus, of course, that propylene, which we are not selling as LPG, was not factored in, while we desire that including the margin for out of Kochi.
So, Amit, just to supplement, so the LP, because till the time the propylene was -- will be produced in full -- to its potential, we are given that it will be a feedstock to the refinery, what they are doing is, they are trying to augment that by increasing production of products like MS and HSD, which involves a couple of operational steps like adding some new catalysts and also fine-tuning the design capacity. So this is all part of the stabilization process. And also once the shutdown happens, they will be in a position to do whatever further optimization and fine-tuning that they have to do. And early next year, once the petchem units are also commissioned, then the propylene production will automatically be increased.
Correct. And just one last question. On the marketing business on a Q-on-Q basis, would you say the business was stable? I know you guys don't share the breakup of the EBITDA that the marketing business makes, but was there any impact from a profitability perspective at -- on the marketing business? Or you would say that it was business as usual?
It was like any other quarter, I mean, the competitive nature of the business now remains strong. So I'm not seeing anything, which was, to say, anything different as such.
So no impact on profitability due to any tweak or delays in fuel price, hikes or something? That is as is -- as it should be?
Yes, yes. That's -- there have been -- as you would be aware, there have been periods and there have been some challenges, but overall, it has been a process whereby the daily pricing has operated the way it is supposed to operate.
Okay, perfect. And just one quick last question. What was the HSD market share you said? I think I missed it.
The HSD market share amongst the PSUs is...
28.56%.
28.56%. This is amount for PSUs.
Next question is from the line of Amit Rustagi from UBS Securities.
Sir, I would like to understand that how we are calculating the inventory gains in the refining? Sir, we have given a refining inventory gain of INR 1,275 crores. So could we get an insight on how do we do calculate this number?
That's a tough one. Just one minute, Amit.
Yes, sure.
Standard formula across the industry support when we are using the popular crude [ passes ] for the production. These are logically the replacement cost for the crude. So the differential between my actual production cost and the replacement -- actual procurement cost and the replacement cost for the crude in the particular production fortnight, that compares to differential we take it as inventory gain or loss.
Sir, may I tell you my understanding? So if we have procured a parcel on first with oil at $70, but when it goes to processing and on 10th, at that time oil is $75, so we account $5 as inventory gain. And the cost of parcel is accounted as $75 for the purpose of calculating normal GRM.
Right.
Right.
Sir, but don't you think that in this method, because the crude procured is of $70 and when it has gone for procurement and by that time if the processed goods are priced lower, it is slightly impacting our core GRM and overstating the inventory gains?
It is not like that. Whatever my actual cost of crude procurement, certainly we calculate what is the gross GRM. Only for calculating what is the core GRM.
Yes, yes, yes. Okay.
Procurement cost differential. That amount we...
So, as investors, so we should focus on the total GRMs for the company rather than putting a breakup or split on that, because we have seen in the past like last year same quarter -- fourth quarter or first quarter of April to June, there were inventory losses. The inventory losses were also much higher as compared to the market expectations. Again...
That's the reason why we were...
[indiscernible] earlier, yes, not to give. That is the breakup of inventory gain and losses in refining. Okay. And, sir, could you share with us what is the broad product distillate for Kochi refinery, like how much of the light and how much of the middle distillate? And how much of the bottom distillate?
Bottom now, that is only petcoke and sulfur, nothing else is there.
No FO, no FO.
But has stopped completely.
Okay. Sir, then what is that percentage of -- or what is the middle -- what is the distillate yield of Kochi refinery for the current quarter?
For the current quarter, it is 82%, if I'm not mistaken. Kochi for the first quarter, the distillate yield percentage is 82.4%.
And, sir, our total distillate yield was 83.5%. This means, Mumbai would have been nearly 84%, 85%?
84%.
84%. But, sir, since Mumbai is still a simple refinery and it's having a higher distillate yield, so what kind of further improvement in distillate yield we expect in Kochi, because 82.4%, I know, from the industry standard is quite high because comparable companies are at nearly 81%, but our own refinery, because we have a very high benchmarks, when we are looking at Mumbai refinery, so what do you think potential improvements can be, because 82.4% indicates that we have a sulfur and petco production of nearly 18%, which seems quite high?
So, Amit, you'll have to also factor in that fuel and loss. So that fuel and loss improvements can also further contribute to the yield pattern.
Okay. So what is the fuel and loss in both the refineries for the Q1?
8% in Kochi.
Yes, Kochi. Kochi, sir, what is the number?
Kochi is 8%, and this Mumbai is 5.8%.
Next question is from the line of Aditya Suresh from Macquarie.
I have 2 questions. First is a follow-up to the previous question. Let's use Kochi as an example. Let's say, crude is constant quarter-on-quarter and let's also say that the current crack environment persists. Would your simulation model suggest $3 GRM or something higher? That's the first question. The second is specific to Iran. So our data indicates that your crude imports from Iran have ramped up over the past couple of months. A, do we expect this to hold? B, we keep hearing about freight discounts and better credit terms. Are you able to quantify the impact of this?
Let me try and answer the second one. The first one I'm not too sure whether we'll be able to answer, but we'll try. The second one as far as Iran is concerned, we do have a term contract with Iran, which is currently going on and upliftments are against that current contracts. The total upliftment till date against that was around 2 million tonnes. And going forward, given that the sanctions regime, et cetera, are expected to kick-in from November 4, the quantum has actually come down. In any case, the -- whatever is the term contract, in any case, you cannot go beyond that quantity, that's number 1. Number 2, in terms of the going forward, what is the plan in terms of the[Audio Gap}completely depend upon the sanctions and related aspects, because banking, insurance are all linked to it. Having said that, you spoke about discount and things like that, all these get factored in at the time of the linear programming model while selecting the best crude, which is suited for the refinery. So, therefore, to talk about discount and freight and other things separately doesn't really make sense, because these factors are considered while making the crude selection.
Hello?
Does it answer your question, Suresh?
Yes.
I had a question on Kochi as well.
Yes. You are talking about that data. We will have with you. I don't want to, at this point in time, to hazard a guess on that.
Or if you can answer the question conceptually rather than giving a few numbers. I'm just trying to understand, should we think about current margin as representative in the current crack environment? Or are there the bluff items in there?
See, I mean, to say anything based on a fixed rate crack position is very difficult. We are talking about a period when the numbers will grow -- will change, whether it is a crude price or the crack. So we wouldn't like to hazard a guess at this point in time.
Next question is from the line of Miten Lathia from HDFC Mutual Fund.
Sir, was there any propylene output at Kochi in quarter 1?
Propylene. Yes, there was a small volume of somewhere around 11,000 metric tonnes or something.
The Cochin's propylene capacity is unable to be used because Cochin is far away from the market in India. And the transporting cost is actually working out to be very, very high. And, therefore, it is not that Cochin has difficulty producing propylene, it is a difficulty of selling propylene at a price which is economical. So we are not concentrating propylene as a selling proposition to sustain while we are ready to use propylene as a feedstock in the PDPP project, which is expected to be commissioned in the first quarter of the next year.
Sir, in first quarter of next year, will propylene output at Kochi be 0.25 million metric tons or 0.5 million metric tons?
We can actually change the production numbers of propylene by suitable changes in the catalysts used.
Yes. So the question is the downstream units are going to consume only 0.25 million, right?
That's right, that's right. Unless we find a customer who is willing to accept a price, which is [indiscernible].
So Nitin, that's what he was trying to say that if we produce 0.25 million, the balance will be used for -- as we said, we are ramping up HSD and petrol. And in the meanwhile, we are looking at some more options on the petchem side. So maybe that will take some more time. But in the meanwhile, the product slate will be suitably adjusted.
Next question is from the line of Nilesh Ghuge from HDFC Securities.
Yes. Sir, my question is on BORL expansion. Can you give some -- what is the project status, the CapEx requirement for that?
So BORL project was being undertaken at a cost of INR 3,000 crores. And the refinery is going for a shutdown on from 17th of August for the hook-up of the project. So as on date, the commitment made on the project is around INR 2,800 crores already, and the expense is around INR 2,000 crores. So that's where we are as far as the project is concerned. So on -- from the 17, the refinery is being shut down so that the new units are hooked up to the existing unit. So that's the clear forward as far as the Bina expansion from 6 million to 7.8 million is concerned.
And sir, on Phase 2 expansion, what are the timeline or the CapEx requirement?
So at this point in time, we are focusing on this completion of this project. After that, we will take a call, because that will have to -- we'll have to review how the demand is growing, what are all the other similar projects on the refining side that are likely to come and what is our plan in respect of the associated investment in petchem and all that before we finally take a call. So we are at a very, very -- we've not even started any work on that part. So once the expansion is done and depending on how the market grows, then we will look at it. So there is potential for expansion, but no final decision on it yet.
Yes. And my second question is on Kochi. As you mentioned, there will be plant shutdown in October and November. So in FY '19, how much average utilization will be for Kochi?
Utilization we expect to have the same 15.5 million tons of crude processing because the units will be managed in such a way that we -- we have planned to end the year with the full capacity utilization.
100% utilization for the year?
Yes.
Next question is from the line of Manikantha from Axis Capital.
I just want to check on LPG rebates out of 400 bids that were submitted. I think we had somewhere around 52 basis points, out of which already 6 were allotted to you. Can you give some guidance on when we'll start seeing some decent contribution from these and what is the CapEx required in the initial phases?
Can you just repeat? I didn't get the...
LPG bids, what is CapEx requirement?
So now we'll have to be -- see, we'll have to start the process, and that will start with the license being given and performance bank guarantee being given, all those aspects. And thereafter, we will have to go as per the program. So...
Getting opened now.
So the process of all those 80-odd, for which the bids were invited, that process is going on. So maybe once everything is done, we will start the work. So we would -- I would imagine that maybe towards the end of the financial year, there will be some clarity in terms of the CapEx plans in each of the areas where we have won the bids.
Got it, sir. If I can ask one more question? Will it be possible for you to give the pipeline segment performance, how much of -- its profitability and what was the throughput in this quarter?
We -- it's part of the overall -- we don't have a separate division or separate numbers for pipeline.
Next question is from the line of Vidyadhar Ginde from ICICI Securities.
Just wanted to find out petcoke is what proportion of Kochi's output and of total output?
One second Vidyadhar. The petcoke -- Vidyadhar, during the first quarter, our petcoke sales were somewhere around 0.3 million metric tons, 306,000 tons.
So is the annual production going to be 4x this? Or what would be the peak of the merchandise once -- assuming -- are you already operating at...
No, no, we are operating all the units. Ultimately, petcoke will also depend on the crude selection and all those things. That will be the key factor.
That is not production of petcoke. Petcoke is incidental.
Correct.
The differential between the low sulfur and high sulfur, if it turns out to be otherwise, then probably the production of petcoke will not be as much as it was there in the first quarter. And it should be around 1 million tons in any case.
Yes.
So because the whole issue here is the ideal -- as you would have seen, the heavy and high sulfur crude was around 94%. And this refinery has a flexibility to shift to full low sulfur depending on the spreads and all those things. So you can say that this 300,000 tons is a sort of indicator, which around 1 million will be the yearly production.
And before you move to this coker, what was the FO production in Kochi, FO, LSHS, whatever the fuel oil?
I'll have to...
Rough idea, rough number? Rough numbers?
Yes. One second. Let me make a...
[indiscernible]
See, as my colleague is saying, see, 9 million was the earlier capacity, 9.5 million. So around 6% to 7% would have been the FO production. So -- and these are very rough numbers. There was no coke or...
Yes. And I think it's not comparable also because the capacity has also gone up.
Absolutely. That is the other thing.
And so with the coker 1, you are producing petcoke. But in terms of the distillate production going up is roughly how much because of that? Or what will it be at peak?
No, no. You see, the distillate -- in one of the earlier questions, we had spoken about somewhere around this quarter being 82...
So what was it before the coker was...
I am talking about this quarter. And before the coker, 1 minute, Mr. Vijayagopal will try and...
The distillate, as you must be knowing, is also related to the type of crude that it was...
Correct. Correct.
For this year, this quarter especially, we have been able to process about 95% heavy crude oil, which is high sulfur, of course. And because of the coker, that percentage is high. It has more comparable number, because we've got the coker, we were actually depending on 50% low sulfur fuel, although the -- a comparison will be extremely difficult.
No, no. Sir, where I was coming from is I think in the past, you have said that GRM will go up by 2 or 2.5, whatever. So in that, you were assuming some increase in distillate production on one hand, which is positive. So what was that number which you were expecting?
The -- when we spoke about that uptick in the GRM, basically it was some -- the differential that was there between high and low sulfur crude.
So it was more -- so basically, you are saying that with the coker, the distillate production has probably not increased? That means what is more apparent is that you can process a cheaper, heavier crude?
The whole idea -- ideally, in a coker refinery and also in a complex refinery, the [indiscernible] percentage cannot be brought down to such a low level, let's say, about 7% or so. 9%, 10% will still be of petcoke. So what remains is that there is a limit beyond which a distillate percentage cannot go. The gain is only to use the cheaper crude with the same 84% max distillates.
So basically, the idea was to be able to process cheaper, heavier crude?
The idea was to process as many different type of...
Yes. So basically -- but cost was going to mainly go down. That was where the bang for the buck was really going to come from?
Sorry?
The main gain was going to come from cheaper crude.
Yes. The ability to process crude.
Okay. One last question is what is the average API crude, which Kochi can do and was it doing that in this quarter?
See, they have -- this quarter, they have done somewhere around 31, and they can still go down below. But again, that is a gradual process. I think last year, they had done somewhere around 39. This quarter, it has come to somewhere around 31 point something. So that's where they are at this point.
So when you planned this whole thing, was it planned to -- was the target 31 or the target is even lower and you will gradually get there?
No, no. The issue is, as we said, more of differential, and that will mean the flexibility to process different types of crude. But even like anything else, everywhere there is a sort of line beyond which if they have to go, they will have to look at further...
Other applications, yes.
Yes. So at this point in time, 31 maybe they will further improve, but that we will have to just wait and see. They are trying out some heavier crude also, which are expected in the next few months. So then probably, they are -- if the refinery does process, the average API will come down further.
And what about Mumbai? What is the average API there?
Mumbai, no, I don't have it at this point in time. I'll have to get because the focus was on Kochi. So we got -- I will check and let you know.
Next question is from the line of Vishnu Kumar from Spark Capital.
Could you just let us know how much is the receivable from the government in terms of the under-recoveries?
So as on date, it is somewhere around INR 3,200 crores.
Okay. Have you received -- I mean, the -- is it the -- is it higher than the March ending number? Or will we receive any money in the last 3 months or 6 months?
No, no, we have received money sometime back, January, February and March. See, these are all monthly dues, not DBTL and all that. So after March ending, we got the money, which was in respect of Jan, Feb and March.
Okay. So as of now, only April to June is pending and that is INR 3,000 crores?
There's something pending of November, December also. That, my guess, would be some technically. But November, December and then from April onwards, that money is also pending.
Got it, sir. And so if you could just let us know the inventory -- carrying cost of inventory as of June end?
See, roughly around the inventory, all put together, should be around INR 24,000-odd crores at the current...
Dollar per barrel basis. In dollar per barrel terms, if you can.
Okay. Vishnu, we'll have to work it out and give you offline. I don't have those ready. These haven't been converted. So let us just work it out and tell you.
Yes. And finally, just one question on how much CapEx have we spent till now, sir?
The CapEx...
INR 2,600 crores.
INR 2,600 crores till date. That is, sorry, till June -- not till date. Sorry. April-June, first quarter.
Next question is from the line of Vinit Joshi from Goldman Sachs.
Sir, can you give us what is the LPG volume yield as of now and how much of that you have? Do you expect that to come down in, say, in second or first quarter next year when you have the petchem units running online and the other modification that you're planning in terms of catalysts is taken care of?
No, no. Sorry, you are asking for the sales volume?
Yes.
Okay. So Vijayagopal will answer that.
Actually, the first quarter of percentage of LPG was around 7.1%.
Kochi?
No, no, Kochi. I think the question is around Kochi. We had about 7%, 7.1% by rate of LPG in the first quarter. Ideally, it should come down to around...
4%.
And sir, you mentioned that fuel and loss is around 8% and you expect that to come down. I mean, so where -- what is the level that you expect it to stabilize at?
No, no. This 8.2% is the current level of fuel and loss. The idea is based on the experience over the last 1 year of the stabilization process during the shutdown. We expect them to do some fine-tuning and optimization to see whether that can be brought down. That's what I meant at the beginning.
And Kochi is also using gas already, right? So are you planning to increase the gas intake there?
No. That -- as was said, it depends again on the price that we had to pay for the LNG. It may not be economical for us to substitute gas for the users from which we are using to buy liquid gas.
So at this point in time, there are no immediate plans?
No major changes in the [indiscernible].
Okay. Sir, can you tell us the how much gas are you consuming in Kochi as of now? And does the 8.2% number include both the gas consumed in Kochi as well?
Used for production of hydrogen.
The total, which is consumed mean Kochi refinery is about 116...
PMT.
PMT.
A major part of it is hydrogen mix.
Yes. And they use it for making hydrogen also.
Okay. And so this 8.2% number -- I'm just trying to understand, when you say fuel and loss, does it include the hydrogen production from the SMR process or it does not?
No, no. No, it doesn't. It doesn't include.
Next question is from the line of Vikash Jain from CLSA.
Just staying with Kochi. So is it fair to assume and maybe correct my understanding that once you've kind of tried the various processes and figured out what the problems are and once the shutdown happens, then you'll try and improve those efficiencies? So only sometime in first half of next calendar is when we should start seeing and when correspondingly the propylene production can also arise? Should we start seeing the benefits of the Kochi refinery GRM next -- after the expansion? Is that broadly a correct understanding?
Yes.
Okay. And secondly is, sir, so just to kind of understand what you were saying about the accounting for core and the reported GRM. So broadly, what is your typical holding period for both Mumbai and Kochi put together on, say, inventory holding period? Is it roughly about 15 days or so? Or what is it like?
15 to 18 days, but this will include the transit time also.
Transit time also. Yes, yes, of course, of course. So broadly in a quarter, you would turn the inventory by 3x roughly, a little more than 3x. So from that perspective, in a quarter when crude has moved by $10, if -- unless there is a big change in that inventory holding period, it would be $10 divided by 3 is what the typical GRM is, which is close to where you are. Is that broadly how I should look at it?
Very broadly, yes. But again, this is a very broad number that you're talking about and...
And that would be...
Yes. It will ultimately depend on the quantum of the actual movement.
Okay. So sorry, sir. You said 18 to 20 days, right? I mean, is that what you said? Or -- then in that case, the -- it should be turned more in a quarter, right? I mean, in 3 months, it will be turned nearly 4x, right? I mean, inventory will be turned nearly 4x. So what -- I mean, this calculation, I -- does it also take into account the movement in products that is on a particular day, say, if you bought crude on day 1, right, the spread was, say, $10 if you were to produce or $15, say, for gasoline. And on the day you are selling crude if the spread rises to $20, is $5 extra spread also accounted for inventory gains? Or it does not, it's just the movement in crude, which is used?
Yes, we are using both.
At the refinery levels, both will be treated as inventory gains.
Perhaps that's why the inventory gain is slightly higher than $10 divided by 4. So broadly, is it correct to say that ex of the inventory gain, your guess is that -- I mean, the number that you've given about $4.2, that would be the GRM if there were no inventory gains in this particular quarter?
No. Just to clarify, because since there are several questions around this inventory gain process, see, our intention is never to make money by keeping inventory more than what is required.
Of course, yes.
Without inventory, no refinery can function, no marketing function is also possible. So it is more or less volatility is a reality. Inventory phases will happen. It is a normal part of our process. It is incorrect to split that into trying to understand too much into that and -- because there is no standard formula available and it would be very difficult for anyone to predict numbers as to what -- how much has come out of this and how much has not come out of this. Our intention is not make money by keeping more inventory anticipating profit. We have never done that. We have no intention to do that.
No, no, absolutely, Mr. Vijayagopal. So I appreciate that. And that is also the reason why I think it's a great practice that you've started giving that inventory number separately because we are close to $75, $80 crude. And there is a cycle. If the crude starts falling, we'll at least be able to figure out what is really operational, what is in your hand and what is the volatility, which is largely -- which is difficult to control, because it's a part of a game. So in that case, I appreciate that. But what I was trying to -- and I also understand that different companies might have different ways of calculating this inventory gain. But from what -- the way you have calculated, is it fair -- what I'm saying is that had there been no -- much less volatility in crude price in this particular quarter, your GRMs would have been around that $4.2, $4.3. Is that more or less a correct claim, yes? Yes, okay.
Correct claim, yes.
Okay. Okay. And just, sir, one more thing. Where -- once Kochi stabilizes, like looking at FY '20, which is assuming that that's when we should start getting in the benefits, so what is really going to be the overall diesel percentage produced for the company as a whole? Like fuel oil, you said was 7%, that will go down to 0 for Kochi.
It's already gone down. Fuel oil is no longer produced in Kochi.
Okay. Yes. And that if -- would be about, say, since -- so what would be the diesel percentage for Kochi and for overall company broadly? Of course, there will be tweaks depending on what is more profitable, and accordingly, you will change your group procurement strategy and all of those things. But in a broad basis, what would be the diesel slate for the refinery -- for the company as a whole?
It would be somewhere around between 50% to 60%, somewhere around. I don't have the exact number, but it will be above 50% definitely.
Next question is from the line of Falguni Dutta from Jet Age Securities.
Sir, sorry for asking again on the inventory gain. I just missed the inventory gain, the total figure for the company for Q1.
Inventory gain?
[indiscernible]
Both marketing and refining put together is...
2-6-7-9.
2-6-7-9 crores, INR 2,679 crores. This is both marketing and refining put together.
2-6-7-9. And what was the number for marketing division?
INR 1,404 crores.
INR 1,404 crores. And sir, lastly, sir, how is the inventory gain calculated for the marketing division?
It's -- where we spoke about the crude here, it will be the product -- principally, the way that it is calculated what we do is the same, whether it is refining or marketing.
So like suppose -- I mean, there I understood that you take the actual crude -- the crude as on the date that you are processing the actual price compared with the final product price, and then that goes into the gain. But how does it happen in marketing division, if can you just specify?
The marketing of...
It is like crude when we calculate the inventory gain-losses, what is the actual cost of product, cost of procurement and what is the replacement cost. Similarly even for finished goods also, what is my actual cost of production or cost of procurement and what is the replacement cost of the finished goods. [indiscernible]. So whatever inventory we are holding and whatever is the price differential, we multiply and we find out what is the inventory values in gain-loss.
Next question is from the line of Amit Shah from BNP Paribas.
Sir, just one more question on the -- is there any way you can share the CapEx for FY '20?
Price.
[indiscernible]
No,'18, '19, was INR 7,800 crores. So INR 7,400 crores. Just -- I don't have it. It's somewhere around that level around INR 8,000 cores or something like that.
[indiscernible]
Yes. But that will be subject to some changes. If we undertake some new projects, for which board approvals come, that may change. But as of now, it will be somewhere around that INR 8,000 crore level.
INR 8,000 crores.
And could you tell us, sir, if possible, what is the middle -- the light distillate slate and the middle distillate state individually at Kochi and Mumbai today? In percentage terms will be okay.
One minute then. Light distillates will be around 31%. And mid distillates will be around 57%. This is at Kochi.
Middle is 58%?
Middle will be 57%. And as of -- this is for Q1, and light is 31%.
And for Mumbai?
One second. For Mumbai -- Amit, Ganesan will just mail you separately, because he doesn't have it readily.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you.
Yes. Thank you all. Thank you, [ Diamond ], for the -- for hosting the call. Thank you very much.
Thank you, sir.
Thank you very much, members of management. Ladies and gentlemen, on behalf of SBICAP Securities Ltd., it concludes today's conference call. Thank you for joining us, and you may now disconnect your lines.