© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good afternoon, ladies and gentlemen. On behalf of Batlivala & Karani Securities, it gives us great pleasure to once again host the management of Indian Oil Corporation for the 2Q FY '20 conference call.Without much ado, I would like to hand over the call to the management of Indian Oil Corporation for their initial remarks. Over to you, sir.
Yes. Thank you, Bhavin. Good afternoon, friends. We, from Indian Oil, are happy to be before you in the wake of the Q2 results.From the management side, we have with us our Director of Finance, Mr. Sandeep Kumar Gupta; and General Manager Corporate Finance; Mr. Rohit Kumar Agrawal; Mr. Prabhat Himatsingka, Deputy General Manager Corporate Treasury; and myself, Matthew, the CGM Corporate Treasury.And before we go ahead with the question-and-answer session, as usual, as we have been doing in the past, I would request Director of Finance to give his initial remarks covering the whole facet of the accounts, and thereafter, we'll be taking question and answers from your side.Thank you, and over to Director of Finance.
Yes. Dear investors and analysts, good afternoon to all of you. Festive greetings for the season, which has gone by, and wish you a very happy New Year. I take this opportunity to welcome all of you to the conference call organized by us post announcement of the second quarterly results for '19-'20.While you would have gone through the accounts hosted on the website and also through the updates received by most of you, I would like to briefly dwell on the results to provide additional clarity and thought and insights. First, on the highlights. Though the numbers are not very attractive, yet I would say that we have been able to make some profits despite the inventory losses, et cetera.The average price of crude, that is Indian Basket, which is, say, Oman and Dubai -- 75% Oman and Dubai (sic) [ Dubai and Oman ] and 25% Brent, during this quarter was $61.69 per barrel, which is a decrease of 9% from the average price of the immediate preceding quarter, that is Q1 FY '20.If we compare on a half yearly basis, the average price during the current half year has been $64.75 per barrel as against $73.68 per barrel in the corresponding quarter of FY '19. There is a clear indication of the fact that despite global events, the crude prices have remained subdued.You would have seen from the data published by PPAC that petroleum product consumption in the country for the half year ended September 30, 2019, is slightly higher than that of the corresponding period of last year. Seasonality is a factor in the consumption of petroleum products in the country, and therefore it would be appropriate to compare the consumption of the current quarter vis-à-vis corresponding quarter of the previous year and not with the immediate preceding quarter because Q2, in India, we have a monsoon period. Accordingly, the current quarter consumption is marginally higher than the corresponding quarter of FY '19.With respect to the crack spreads, say, MS cracks with reference to Indian Basket has witnessed an upside during this quarter as compared to the preceding quarter. However, it is still 18% lower than that of Q2 of FY '19. Similarly for HSD, the crack spreads during this quarter has also been higher by about 32% as compared to the preceding quarter. However, it is only marginally higher by about 4% than the corresponding quarter of FY '19.However, in the petroleum space, the spreads have witnessed the decline over the last 1 year. Spreads of polymers in this quarter were 6% less than the previous quarter and 15% less than the corresponding quarter of FY '19. In case of PTA, the spread during this quarter was about 14% less than the previous quarter. While comparing with the corresponding quarter of FY '19, it is 26% lower.With respect to MEG, the spread in the current quarter has shown an upward trend as compared to previous quarter. However, while comparing to the corresponding quarter of FY '19, the decline over the year is much more pronounced. There is a sharp fall of 69%.In view of above factors, which do play a crucial role in the profitability of our business, this quarter, we have registered a profit after tax of INR 564 crore. It is way below the preceding quarter of INR 3,596 crores. One of the major reason is the inventories. In the current quarter, there has been an inventory loss of INR 1,178 crore as compared to an inventory gain of INR 1,233 crore during the preceding quarter.From a half yearly perspective, the PAT is INR 4,160 crore as against INR 10,078 crore in the H1 of FY '19. However, it has to be mentioned that during H1 of financial year '19, there was significant inventory gains as compared to H1 of current year.The revenue from operation during this quarter is INR 1,32,376 crore as against INR 1,50,135 crore in the preceding quarter of the year.Coming to the business verticals, first refineries. The throughput during the quarter was 17.5 million metric tonne, which is marginally higher than the preceding quarter, but was slightly lower than the corresponding quarter of financial year '19.The distillate yield was 79.7% during this quarter, which is slightly lesser than the previous quarter, but marginally better than the corresponding quarter of financial year '19.Fuel and loss during this quarter was 8.9%, whereas during the preceding quarter, it was 8.7%. Consequently, the refineries have registered a GRM of $1.28 per barrel during this quarter as compared to $4.69 per barrel during the previous quarter. The normalized GRMs after stripping off inventory impacts and factoring in price lags for the quarter is $4 per barrel as against $2.3 per barrel for the previous quarter. If we compare on a half yearly basis, the normalized GRMs for the current half year is $3.2 per barrel as against $5.5 per barrel in the corresponding period of last year.As mentioned earlier, the upside in the cracks of both MS and HSD during the current quarter as compared to the preceding quarter is the reason behind improvement in GRM. However, the decline in GRMs from a half yearly comparison is due to the fact that the cracks of both MS and HSD in the H1 of financial year '19 was higher as compared to the current half year.Coming to pipelines, the capacity utilization was about 92.2% during this quarter as compared to 92.8% in the previous quarter. Our pipelines continued to generate stable returns, giving an EBITDA of about INR 1,587 crore during this quarter, which is about 2% lower than the preceding quarter and almost at par with the corresponding quarter of financial year '19. The current EBITDA on a half year basis is almost at par with the corresponding period of last year.Coming to marketing. The product sale during this quarter was 20.181 million metric tonnes as compared to 21.604 million metric tonne in the preceding quarter.On a half yearly basis, they have remained more or less flattish, that is at 41.8 million metric tonne in H1 of FY '20 versus 42.1 million metric tonne in H1 of financial year '19.Accordingly, the marketing EBITDA for this quarter stood at INR 3,813 crore as against INR 4,565 crore of the previous quarter. Marketing EBITDA for the corresponding quarter of financial year '19 was INR 4,210 crore.While comparing the marketing EBITDA on half yearly basis, it is seen that the EBITDA for H1 of financial year '20 is INR 8,378 crore as against the EBITDA of INR 8,579 crore in H1 of financial year '19. Thus, the marketing EBITDAs are stable.Coming to petrochemicals. During the quarter, the petrochemical business reported an EBITDA of INR 774 crore as against INR 686 crore in the previous quarter. However, while comparing with the current half yearly performance with that of corresponding period of last year, there has been a sharp downside in EBITDA. The major reason is due to the shrinkage of petrochemical spreads in polymers, MEG and PTA. Moreover, the PTA unit was under shutdown during the first half of the current year. The PX/PTA plant has commenced production during the second quarter. We believe, as we go forward, the petchem will continue to contribute to the bottom line of the company.On the borrowings front, with -- you would have seen that the borrowings as on 30th of September 2019 has decreased by about INR 6,000 crore and is at INR 80,382 crore level as compared to INR 86,359 crore as on March 31, 2019.However, during the current quarter, there has been an increase of about INR 8,000 crore as compared to the previous quarter. The increase is mainly attributable to exchange translation, CapEx and dividend payouts, et cetera.I will end my briefing here, and we will take your questions now. Thank you very much.
[Operator Instructions] First question comes from Mr. Vinit Joshi from Goldman Sachs.
My first question is on normalized GRM. So I'm trying to understand the underperformance of your core GRM, which removes inventory loss versus a normalized GRM, which you report. Core GRM was down Q-o-Q, while normalized GRM had gone up. Like, what is the reason for that? Is it just lag impact or does it also have to do with crude premiums? Can you please elaborate on that?
Could you understand the question? Can you kindly repeat the question?
The question is that your core GRM, right, which is basically your reported GRM after adjusting for inventory loss, right, that has come down Q-o-Q. Last quarter, it was $3.4 or something, this quarter, it's $3. But your normalized GRM, which you just announced, right, that has gone up to $4 in the quarter from $2.7 last quarter. So I'm just trying to understand why your normalized GRM is up while you're core GRM is down? So is it just -- is it something to do with your -- the lag impact or is it something that the crude premiums have gone up, that's why you are not able to realize the GRM that you should have?
See, first, I think, I will make a correction here. The reported GRMs in this quarter is $1.28, whereas in the preceding quarter, it was $4.69. And the normalized GRM in this quarter is $3.99, to be very precise, that is what we told as $4. And the Q1, that is in the preceding quarter, it was $2.27. So that -- those are the corrections of numbers.
Yes. And the inventory losses in this period is INR 1,807 crore, whereas in the preceding quarter, it was a gain of INR 2,362 crores. So if you see the last quarter GRM -- reported GRM was $4.69 per barrel, but the normalized GRMs, if we strip off the inventory gain, remains only $2.27 per barrel. As against that in the current quarter, the reported GRM is $1.28, but if we strip off the inventory losses in this period, then the GRM increases to $3.99 per barrel.
All right. I mean -- okay, all right. So my second question is, last year, in the second half, you had a big negative working capital drag, which seems to have reversed in the first half. How should we think about the impact from working capital and cash flows in the second half of this financial year?
We expect it to be stable now, provided the crude prices remain stable, which perhaps is the situation now. The crude prices are in a finite range. So we believe it to be stable.
Next question comes from Mr. S. Ramesh from Nirmal Bang.
Can we understand the reasons why the marketing EBITDA is down, both in terms of the first quarter as well as the second quarter last year?
Last year, you mean to say or...
Yes. I'm saying -- if you look at it from the numbers you have given, the marketing EBITDA for this quarter is INR 3,800 crores compared to INR 4,210 crores, which you mentioned for the second quarter last year. Even on a sequential basis from first quarter, this is down, so...
Yes. If you remember in the last conference call, we did mention to you that this year -- of course, the year that we had mentioned last year, of course, was slightly abnormal in nature. So there were many questions asked, would you continue at the same rate? So we had mentioned at that point of time that there will be some correction, and after the correction, it will be stable enough.So this is the correction point that has taken place, and you will find that it's quite stable now. If you -- for that, you need to compare the earlier preceding quarter, you'll find that it was INR 4,500 crores with an inventory gain there. And so you'll find that it's almost on a even plateau now. So you can't expect the abnormals to be there as it was in last year. Last year, we had some abnormalities, but then this year, it is going to be steady.And if you compare the previous year, you will find it was quite low because your comparison is going for 2 years, hence, for the year before that, it was quite low. It jumped up. And that gave a lot of positivity to the sector. But then we said -- did mention that there will be corrections. And this is the time when the corrections have taken place.
Okay. So in terms of the petrochemical business, what is the outlook going forward? So you had operational setbacks and the spreads are low, so what is the sense in terms of when you see the polymer and the PTA spreads improving? And what is the kind of operating rates you are likely to see in the second half and next year because I think you're also planning some shutdowns?
Operationally, I think the plants will now operate at full levels. However, we cannot, again, anticipate what is going to be the spreads for petrochemicals. So if they improve, definitely, we will generate good returns from petrochemicals as their levels -- that operational levels are going to be steady now.
And does that include the new polypropylene plant in Paradip? Is that also up and running in full capacity?
Yes. That has started operating. And in the -- it has given a profit also. For the month of September, we have earned about INR 15 crore out of that unit. So the margins will also start coming from that.
So is that PP plant is operating at full capacity, or what is the volume now?
No. It is not operating at full capacity. Out of 2 trains, one train we are operating as of now.
Next question comes from Mr. Probal Sen from Centrum Broking.
I have two questions. One was, can we get a sense -- one has seen that borrowings have come down, as you mentioned. And in the cash flow statement, also, there's quite a few adjustments for repayments that come across. So has the DBT outstanding, which was at about INR 97 billion, if I remember from last quarter, has that come down materially? And what is the status of the payment cycle now? Is it coming every month or is it still coming only in larger lakhs? That was my first question.
What is...
Government outstanding, yes.
Government outstanding, yes. It is about at INR 9,800 crores levels as of now, and it is pending since, say, some amounts since February 2019. But then there is a regularity of payments now. We are receiving the payment with fair regularity. So we do not expect the gov outstanding at least in the next quarter to go off.
But as of now, it is still around 90 -- as you said, INR 9,800 crores?
INR 9,800 crores, yes.
Okay. So the second question was the throughput from Panipat actually fell quite sharply in September. Now forgive me if I -- you have said this before, was there a plant shutdown there or what was the reason for that...
Yes. It was a plant shutdown.
And what was the reason for the same, sir?
Current year -- we must have told earlier also that current year, all our units will have shutdowns to be ready with BS VI products, as it is, naturally. So in line with that only, we are taking shutdowns of various refineries.
Okay. Sir, one last question, if I may? Can you just give us some CapEx guidance for this year? And if you can break it down in terms of segments, that'll be very helpful.
We have a target of about INR 25,000 crore for the current year. And we have spent about INR 9,800 crores still now, till September. So we are likely to meet that CapEx target of INR 25,000 crores.
Okay. Any major projects highlights, sir? What the money is going to be spent on this year?
Matthew, can you maybe...
Yes. Some of the payouts will be for the BS VI project, which is absolutely going on right now. And there would be the INDMAX Bongaigaon Refinery, which is also on screen, which is being implemented. Then, you have some smaller brownfield expansions coming up, that would be initial expenditures. You'll have some pipelines expenses for the expansion of pipelines, that is Paradip-Hyderabad pipelines, CGD projects. Then you got marketing, you will have new terminals and depots coming up with new cylinders and pressure regulators and, of course, some modernization of ROs. And of course, petchem, we are also planning to have some -- there'll be some spillover of the expenditure related to polypropylene of Paradip and some expansion plans coming up for energy. And we also have something for gas and alternate energy. This will be the major constitution of the expenditure that we'd be doing this year.
Next question comes from Pinakin Parekh from JPMorgan.
Sir, my first question is when we look at refining margins of IOCL stripped off the inventory gains and price lags, you mentioned it was $4 a barrel, and this seems to be substantially lower than the benchmark refining margins. So -- I mean, just trying to understand why was -- why is it such a large deviation versus the benchmark and can this narrow going forward? And also, there seems to be -- the cost seems to have been risen? I mean is it just because of the Panipat shutdown or have the cost for refining also moved higher?
As far as benchmark, I think you are referring to Singapore benchmark margins. Is it?
Yes, sir. Yes, sir.
So -- yes, there is a difference -- there is a variation in our normalized margin vis-à-vis Singapore benchmark margins. So we will have to look into the reasons, whether there is any change in the methodology of Singapore benchmark margins or maybe the components which are considered for that, the pricing for various grades, we will have to look into that. We are yet to analyze that.
Understood, sir. And sir, what about the refining operating cost? Have there been any increase in this quarter? Because on an implied basis, there seems to have been an increase on a per barrel basis.
No. There is no increase. In fact, we are seeing that it is practically same as compared to the corresponding period of last year.
Next question comes from Sabri Hazarika from Emkay Global.
I have 3 questions. The first one is, of course, on the debt level. So currently, your debt is around INR 80,000 crores, which is the gross level. So is there any guidance? Is there any targeted debt levels, which you are currently having whether reducing it or probably maintaining at these levels?
See, the borrowing levels are depending upon the CapEx plans also. So right now, from the CapEx plans that we have got right now, probably we'll be maintaining these levels except for, of course, the mismatches that can happen during the end of the year because of the excise duty payments, which come on the last day of the year. So probably, you may have a mismatch to that extent. Otherwise, probably, this will be a very okay level to maintain. And if you'll see from the debt equity ratio, we are just at 0.79, 0.78
0.74 to be precise.
0.74 to be precise. And therefore, we are much lower than the 1:1 normally, which people try to look as benchmark.
This borrowing level of INR 80,000 crores also includes about INR 7,000 crores of financial lease obligations, which is an accounting requirement. So this is not pure borrowing. So we expect the borrowing levels to be around this level only. I say they will remain perhaps at this level, at least in the next quarter. The last quarter, we cannot predict, that will depend upon the government dues. So that we will have to see whether government dues rise or not.
All right, sir. Second question is in your -- on your petchem. So you said that your petchem spreads are quite low -- quite weak, and you had a shutdown also during the quarter, but still the EBITDA on a quarter-on-quarter basis, that is Q1 versus Q2, that has increased. So is there any provisions, anything of that sort, why the petchem EBITDA has increased?
No. As we mentioned earlier also, and some time back also, our PTA plant was totally under shutdown for Q1 and it has started during Q2. So that is the reason for some upside there. But petrochemical spreads for, whether it is polymer or PTA or MEG continues to be very, very weak, and that has definitely impacted the desirable markets.
All right, sir. And just one figure I wanted. You basically report a figure called gross margin of petrochemicals. So do you have that number for FY '19 and for this quarter?
I presently do not have. Perhaps you may -- we will give you subsequently.
All right, sir. And just one last question. Any comment on the BPCL stake sale? Would you be looking into it or anything on that side?
Let us see. If we receive anything officially, we will be able to examine and comment on that.
But you were open to looking at BPCL?
We will have to see what is the package on the offer. So we do not know whether the entire BPCL block is on offer or some part of it is on offer. So we will need to look into it.
Next question comes from Vidyadhar Ginde from ICICI Securities.
Sir, my question was on the Euro VI related shutdown. So would that have affected refining margins to some extent in the second quarter end? Any indication on how that could impact throughput as well as, which refinery secondary processing units would be shut down in Q3 and Q4, if you want to give us some guidance?
Yes. Definitely, there is some impact of BS VI shutdowns on our refinery performance and consequently on the GRM. So as can be seen, the throughput is -- throughput increase is also not that much there. Our fuel and loss numbers are also little subdued. And since some shutdowns are still pending, so there will be some pressure on the GRMs because of this.
But in Q2, which refineries had Euro VI related shutdowns and for how many days, if you could let us know that?
We will have to give those details separately later.
I'm talking about the previous quarter -- the quarter that went by.
I -- do you have?
Vidyadhar, I think, for -- to get into those nitty-gritty, we'll have to give you separately. There are different units in each refinery, different units for different days for different periods.
Okay. Sir, we'll take it offline, sir.
So what I would like to tell you that we are finished with the Panipat Refinery, Barauni Refinery and Digboi Refinery. Those have been finished. And there'll be other...
Panipat, Barauni and...
And Digboi. So the other refineries will have a shutdown going into this third quarter also. So maybe -- and in the fourth quarter, a bit of it.
And these 3 refineries, which you mentioned, were they having the shutdowns in Q2 or some of them was in Q1?
Yes, yes, yes. Q2.
One -- some of them were in Q1 also. Q1 and then Q2 spilled over to Q2.
So details will be given to you afterwards.
Sure. Last question on -- any indication on what you would do on the tax rate? Are you likely to stick to the old regime or are you still evaluating that?
Yes. We have MAT credit carrying forward. And we are a high CapEx company. So we are evaluating that. We will take a call at an appropriate time, perhaps towards end of the year.
Next question comes from Mr. Rakesh from HSBC.
Sir, is it possible for you to give the breakup of the expected CapEx for this year? And secondly, what are your expectations on this quarter's and next quarter's GRM, considering there has been lot of volatility on the freight rates? Has it impacted you guys? And if yes, how the market is behaving now? If you could throw any light, that would be very great.
Yes. First on the CapEx, we said INR 25,000 crore is the CapEx target for the year, we have spent about 9,800 crore till September. And we expect to meet our target of INR 25,000 crore for this fiscal. The broad breakup between refineries and other verticals, say, it's about INR 7,300 crore for refineries, about INR 5,600 crore for pipelines, about INR 6,500 crore for marketing; INR 1,000 crore for, say, E&P; about INR 1,500 crores for petchem; and residual for other businesses. And now coming to the freight rates, though it had ballooned to a high level, but now very quickly, they have come back almost to the same levels as was prevailing earlier.So while there may be some impact, but perhaps that is immaterial. So we don't expect that to affect our GRMs going forward.
Understood, sir. Sir, if I could just follow-up with one more? Now given the BS VI project is near completion and April 2020, it gets sold out to the entire country, what are the incremental margins, either in refining or marketing, you guys are expecting? Or if I were to slightly ask this question differently, you have -- obviously, 3 companies have invested a massive amount of money. So what is the expected returns out of these projects? I mean how do we think about you generating incremental margins from these projects?
So these calls on the pricing are yet to be taken. Let us see because -- let us see what are the differentials prevailing in the international market and to what extent it can be recovered from the domestic market. Now that 4 or 5 months are still remaining when these BS VI supplies are to be started from 01/04/20, we will take a call subsequently, not yet firm.
Understood, sir. Sir, one last question. Has entire throughput of petrochemical plants now stabilized? Or there are still some plants under shutdown?
No. They are stabilized. They are...
Next question comes from Yogesh Patil from Reliance Securities.
Sir, I have 2 questions. First of all is for marketing segment, how many new petrol pumps addition expected for FY '20 and '21? And the second question, in the last 1 year, sir, we have lost around 0.7% to 0.8% in petrol and diesel market share to the private players. So what is your strategy to [ arrest ] the losing market share? So can you throw some light on both the questions?
ROs, we do not have the number for 2021. So -- but generally, we do about 1,500 to 2,000 per annum. So that should be the level, let us see. We do not have the number right now.
Sir, and in the first half FY '20, we have added only 400. So will you be maintaining the high run rate to achieve the target of 1,500 in a year?
We will look into this information and provide you subsequently.
Okay. And what about the market share, sir?
The market share, we are having lot of strategies to sort of clinch back the lost market share or at least erode further loss of market share. But then those are matters of strategies, which, I'm sorry, I will not be able to type -- or share.
Next question comes from Amit Rustagi from UBS.
Yes, sir, two questions from my side. First, relating to the operating cost for the refining business, is there a substantial increase in the refining operating cost in the last 1 year?
No. It is not. There is no increase.
Sir, but when we look at the numbers, which are reported by the company, so we are witnessing a significant increase in the operating cost. And I can tell you the mechanism. You are reporting the reported GRMs, and you are reporting the EBITDA, so the difference between EBITDA -- the GRMs and the EBITDA, we are considering as operating costs. Is that correct?
That may be because of foreign exchange fluctuation. In this period, there is a loss of foreign exchange also. So that is also booked on segment-wise basis. And at least for crude, it is booked entirely to the refining -- Refinery division, for the Refinery segment. So perhaps that may be the thing which may be bothering you. But otherwise, on operating cost front, it is stable.
Then what is the normalized operating cost as per your calculations, if you can share that?
You want in, what, dollar per barrel terms?
Yes. Dollar per barrel or rupees, crore, whatever you want to share.
Yes. It is $3 per barrel, all refineries put together, old, new, everything, $3 per barrel, including depreciation, but excluding foreign exchange fluctuations.
Sir, stripping off depreciation because I am referring to the cash costs?
So stripping off, it is $2.04.
$2.04. So around $1 is the depreciation for...
Depreciation, yes.
Okay. Sir, second thing about the debt part. So in the first half versus INR 25,000 crore, we have done only INR 10,000 crore CapEx, so remaining INR 15,000 crore CapEx is likely to come. And similarly, in the first half, we have received some payments from the government, while in the second half, the receivables from the government will keep mounting. So given that outlook, should we assume that the net debt for the company will rise very sharply by the end of this financial year?
That's what we mentioned earlier. By the end of the year, probably, we may come to the same levels as we were in the last year. And Director of Finance also mentioned the fact that if the government dues do not come in time, probably, it may still rise. But if the government dues are coming in regularly as it is, then probably we may be in the same wave.
No. But sir, our CapEx is also pending, INR 15,000 crore CapEx is also...
So around INR 15,000-odd crores is pending, and we will be able to do it. At the same time, we'll have some internal resources also being generated during the second half.
And second half, you will have dividend payments as well, which were not there in the first half?
Yes.
So this means that given those things, we should assume a very sharp increase in the debt levels going forward?
At the end of the year, yes, we may, and then it may come down. So that all depends upon government dues to what extent they are sort of settled. So after this INR 9,800 crores, in fact, in the second half, after September, we have also received about some further payments from government towards the dues. So but then that depends upon what are the budgetary provisions with them and how much they can give to us before 31st December.
Sir, total, how much they have given for this year? And how much is outstanding as of now?
At the beginning of the year, they have -- it was INR 19,000 crores. So they have given about INR 16,000 crore in this year.
They have already given INR 16,000 crore. And sir, how much is outstanding for now?
As of now, INR 9,800 crores is outstanding.
INR 9,800 crore. Okay.
Next question comes from Mr. Nitin Tiwari from Antique Stockbroking.
Sir, it's related to actually the privatization news that we are hearing in media right now concerning BPCL. So sir, just wanted to understand that have you had any discussions with government or have they given any indication around how the pricing would be, like, taken care of, if one of the companies out of 3 gets privatized? I am talking about the retail fuel pricing, petrol and diesel. Because as of now, like, all 3 companies, in a way, coordinate the pricing, like, especially, like, if crude moves up or there are any political events like elections, et cetera. So what happens in the case when one company is privatized and the other 2 or not? So if you can, like, give some thoughts over there?
Yes. While on the first part, we are also reading from the news purpose only. So I will not be able to comment anything till we sort of get some official communication on that. As regards pricing, the pricing is -- all companies are independent of pricing, actually. And why you say so is perhaps because there is a set formula of import parity or trade parity pricing, which every company is following. So I do not see any disturbance in that if 1 or 2 companies are privatized, if they are.
Next question comes from Ms. Nafeesa Gupta from Bank of America.
My question to you is on...
Sorry to interrupt ma'am. Could you please -- a bit loud, ma'am? Your voice is not audible.
Yes. Can you hear me now?
Yes. You are audible. Please go ahead.
So my question is on disinvestment as well I just wanted to know if there's any news of Gail being sold off or parts of Gail being sold off. And my second question is that the petchem sales are also down, sir, Y-o-Y basis, almost 30%, is that also due to shutdowns? Or is it -- are we seeing lower demand in petchems on an industry level?
So on Gail, I think a lot is being talked about in the media also. And we also understand that there is a move for bifurcation of Gail. I think Chairman of Gail was in media this morning also saying that perhaps they will finalize the bifurcation by the end of this fiscal. So we are also hearing from the media only.Your second question was on the petchem margins, so as we mentioned, our PTA plant was under shutdown for the first -- full first quarter and it resumed for part of the second quarter. So that is why our petchem margins are lower. And spreads for petchem were also lower. So while the operational level -- while from an operational angle, we will be stable from the next quarter, but the prices will be a big factor to watch.
And sir, the demand, the sales volumes for petchem?
That is down because -- our sales are down because of our volumes because our plants were down.
Got it. Not because of a demand issue?
No, no.
And sir, on the refinery, just wanted some clarity and guidance on the coming few quarters. Do you see refining margins being subdued due to more shutdowns and lower cracks in the coming few quarters as well?
So as mentioned, we already had -- we had some shutdowns in the previous quarters also, and we will have some shutdowns in the coming quarters. So if the prices remain the way they are, we expect our GRMs also to be at the normalized levels. Inventory gains and losses are something to be seen. They depend upon the international prices.
Next question comes from Ms. Harleen from Bank of Baroda Capital Markets.
I just wanted your take on the new policy announced about the opening of the licenses of petroleum sales?
So okay. Could you be more precise, what is your question?
I said I wanted your take on the opening of the licenses of petroleum sales to the retail -- in the retail outlets?
This is what I wanted. [Foreign Language] What -- my take with respect to what, say?
Your take as for your -- what do you think will happen to the markets there?
I find this as an opportunity which is given to, say, entrepreneurs. Wherever their net worth is INR 250 crores or above, they are free to have retail selling of petrol and diesel. Now we believe that despite this requirement of investment of INR 2,000 crore has been sort of removed, but still it will be very challenging for anybody to set up a retail outlet because there are -- fluctuations in prices are there. So I do not know how they will whether that price fluctuations. A big company like us, an integrated company like us can definitely whether that is [ storm ] and ensure that the market prices are stable. It may be very difficult for a private small player to do that. So let us see how the thing unfolds.
And sir, my second question is -- and the last one is what does your diesel and fuel oil slate look like ahead of the IMO?
We have already started producing IMO-compliant FO and our first parcel was dispatched on 26th of October, and we will be selling it through Kandla and Kochi to begin with and later on from all ports. So we will be producing about 1 million metric tonne per annum from our Gujarat refinery. So I think we are the only producer of IMO-compliant fuel in the country.
Next question comes from Varatharajan from Systematix.
Sir, any guidance on the polypropylene plant ramp up, and at what rate it effectively operated in the last quarter, and how it will ramp up in the future?
So while exact numbers in quantity terms, I do not have, but then the first train was commissioned and it is operating. So perhaps more details we can subsequently provide to you.
No problem, sir. My second question was, like, you have this breakup in terms of EBITDA contribution, the other segment, what all goes into that, sir?
Gas.
So others will have E&P, gas, solar, wind, et cetera, et cetera. So those are small business segments of IOCL.
Next question comes from Mr. [ Sumit Vora ] from [ Swiss Finance ].
Sir, just -- I mean, I'm just thinking a lot, but the matter of fact is that you mentioned that we have some amount of CapEx, we have dividend payouts, and our profits in the first half comparatively are lower than the first half of last year. So do you think that, sir -- I mean, we could expect that to offset the lower refining, we can actually look at a sharp increase in marketing EBITDA since IOC is predominantly a very large market share player? Can we expect a sharp increase in marketing EBITDA from you now?
That sharp increase would come only from the volumes, and volumes will depend upon the market. So I don't think we can do that through pricing.
Okay, okay. And sir, if you can just throw some light on the volume growth? Because we saw some subdued demand in the month of September. So are you seeing a increase in volumes for petrol and diesel?
Q2 is generally lower than Q1 because of the monsoon. So we expect the demand to pick up now in the next quarters.
Okay. So sir, if you can share -- I mean, are there any numbers for October do you have for petrol, diesel?
Sorry to interrupt Mr. Sumit. Could you please join back the queue for further questions, sir?Next question comes from Mr. Manikantha Garre from Axis Capital.
Can you please update us on the LNG -- Ennore LNG terminal, the status of that? And as well as the regasification charges that you are -- from the customers on that?
See, we cannot reveal the regasification charges to you right now. What we can tell you is that we have already signed 3 gas sale agreements with anchor customers for supply of LNG from Ennore terminal. And more are yet to come because the pipeline is yet to be totally in place. Till such time, we will not be having the full capacity. And once the pipeline comes into place, probably the -- and we'll be having it by 2021. So of course, CPC is one of our subsidiary to which we have already commenced and Madras Fertilizers, Tamilnadu Petroproducts, these are some of the companies with which we have got agreements.
So present utilities of the terminal is about 15%. And only because of the pipeline problem, the capacity ramp-up is not possible immediately, but we are expecting the pipeline to be complete by, say, end of next calendar year, that is December '20 or maybe max at March '21, by which time it will be fully operational. But in between also as and when the line progresses, we will sort of ramp up these quantities.
Next question comes from Sarfraz from MOSL.
I just wanted to understand the tax part. So which plants enjoy MAT credit and how long the company will enjoy it, I mean, the tenure for it?
As you know, legally, it is allowed for 10 years carryforward. But our -- all our MAT are 1-year or 2-year-old. That's not an issue with us. And what was the...
And sir, which plants enjoy MAT credit? Can you please elaborate?
All CapEx.
Which plants, plants, yes?
No. MAT credit is on a company level, no. It is not at the...
Next question comes from Vidyadhar Ginde from ICICI Securities.
Vidyadhar has already finished his questions.
Next question comes from S. Ramesh from Nirmal Bang Securities. It's a follow-up question.
Can you share some light on the current run rate for gross refining margin because we see a lot of volatility, the Asian margins are down. So what is the current run rate for GRMs?
Current run rate means we just declared the Q2 results, and now we'll have to wait for the Q3.
The month of October, can you share some insight?
No. We do not do on a monthly basis. We do not [Foreign Language] disclose on a monthly basis.
Understand. So secondly, on the LNG business, the GSA you have signed? Is it -- are you following a fixed utility model like Petronet LNG? And what is the kind of pricing you are enjoying for the gas you are sourcing from wherever you tied up the LNG?
Gentlemen, Mr. Ramesh, I think we'll not be able to disclose the pricing and other factors over here on this call right now because I don't think that would be the right approach for us to inform what the pricing and the strategies and the tenders that we have and the contracts that we have about sourcing and supply and so forth.
No. That's fine. So -- no, in terms of the...
Yes. We do -- of course, it has to be economical. Actually, it's a business organization. We have to take business calls, which are economically feasible and financially viable, and that's how the contracts do work out.
So I just want to understand, is the Ennore terminal going to be based on a fixed IRR model like Petronet LNG is following for the piping?
Yes, yes.
Next we have a follow-up question from Pinakin Parekh from JPMorgan.
Sir, IOCL is one of the promoter entities of Petronet LNG and recently, Petronet LNG signed an MoU with Tellurian in the U.S., and they have said that while they are committed to 1 million tonne of LNG sourcing from the U.S., they are willing to go to 5 million tonnes if Petronet's promoter entities would be interested in offtaking that gas. So would IOCL be interested in tying up with Tellurian or Petronet to source additional gas from the U.S.? Has the company -- because the MoU apparently is going to expire in March, so in the next few months, a decision would need to be taken.
Now Petronet LNG is a listed company, so we will not be able to comment anything on their behalf.
Sir, will you be -- I mean, IOCL be interested in sourcing gas from the U.S. and Tellurian?
We keep on exploring various alternatives. So whatever is economically beneficial, we will take a decision.
Next question comes from Reena Shah from Ashika Stock Broking.
Hello?
Yes.
Yes. I wanted to ask any major [Foreign Language] pipeline projects in hand, and any completions we can expect in 2020 or '21?
Definitely. The major pipelines that is we are having is Ennore-Madurai-Tuticorin, that's our LNG pipeline that we are talking about. Of course, it's not going to be commissioned this year, but, of course, next year. Then we've got the Paradip-Hyderabad pipeline also. We've got this Koyali-Solapur pipeline going on. So these were some of the pipelines which are right now. And going forward, we have got some augmentation of pipelines that is already there. And those are the ones which will be there, but I don't...
Sir, what are capacity additions in this pipeline?
You're going into too much of nitty-gritty, ma'am. I think we'll have to answer that separately. My team would take care. Mr. Avinash Singhal, you can get in touch with him. He'll give you the details. Usually, what we do is that we prepare outsource for the accounts and the results thereof. Anything peripheral to that would also be answered, but once you get into the CapEx and projects and infrastructure, probably then we'll have to go back and get the numbers.
Thank you, ma'am. This would be the last question for the day. I would now like to hand over the floor to Mr. Bhavin Gandhi for closing comments. Over to you, sir.
Thank you. On behalf of Batlivala & Karani, I thank you, everyone, for participating in the call. You can end the call now. Thank you.
Thank you very much.