Thank you, ma'am. Very good morning to ladies and gentlemen, and it's my pleasure to welcome all of you to the 2Q FY '27 earnings call of HPCL.

We have with us Mr. Vikas Kaushal, Chairman, Managing Director; Mrs.

Srividya Venkataraman, Director Finance; Mr. S.

Bharathan, Director Refineries; and Mr. K.

Vinod, ED Corporate Finance. I'd like to hand over the call to Mr.

Vikas Kaushal for his opening remarks. Floor is yours, sir.

Thank you, Mr. Varatharajan, and good morning, everyone.

Pleasure talking to you again on our quarterly analyst call. Since the introductions are already done, I'll get on with the agenda.

We'll do the same as we've done in the last few calls, maybe speak for about 5, 7 minutes, 10 minutes giving our perspective on the situation. Numbers you already have and some of you have already commented or written about the numbers, and then we will keep the floor open for questions.

Just to start off with the business overview, we all know the challenging times continue. If you see today's crude price, you will know where it is.

It keeps on fluctuating wildly and currently is quite high. In this whole crisis, which has now gone on for over 8 months, our teams have been resilient and agile and basically kept the wheels in motion.

As a management team, our focus has been, first of all, to meet our customer expectations to the lakhs and crores who depend on us for mobility and cooking fuels. That has been the primary objective, and I'm sure we have lived up to the expectations in the trying times.

Obviously, running the assets in an optimized manner is a precursor to that. Trying our best to manage the financial situation, with the quarter 1 we had, we had a challenging financial situation.

In all of this, we are not losing thought on what we need to do to prepare for the future and how do we want to transform ourselves in the future. We'll touch upon all of these elements in the opening comments.

You all know we had a tough quarter 1 with significant losses both on standalone and consolidated basis. Q2 clearly was a bounce back, which all of us are very proud of.

Numbers you've already seen, but I'll talk of a few things. If you look at one of the pivotal numbers, the EBITDA numbers, against a loss of ₹14,816 in quarter 1, we posted ₹9,822 crores of profit in EBITDA in quarter 2.

This is a swing of 24,681. As a management team, that's a swing too much, but at least the positive side is we're able to swing it.

Obviously, the questions you'll have is what drove it? I think three or four factors.

One, a very strong physical performance both on refining and sales. I'm not talking just about headline numbers which get published, but as we peer between the layers, there was very strong performance on both these aspects.

Our refinery GRMs in quarter 2 were I think we've declared the number at $32.15 pre-SAED. I'm sure there'll be questions on this.

We will answer them later. That is significantly higher than what it was in quarter 1, and our refineries performed quite strongly.

The marketing margins were decent as compared to significant under-recovery in quarter 1. Small help from inventory gains, though not very significant.

A lot of it is operational performance. Very tight cost and working capital, and even CapEx control helped it.

The PBT for the quarter was ₹6,768 versus ₹17,446 negative last quarter, again a swing of ₹24,214 crores. Resulted in a PAT of 3,438.

Probably the PAT is a bit subdued on account of tax treatments, but nevertheless, if you look at PBT, the number at 6,700-odd crores was a good one. As a result of this improved performance, we were able to recover some balance sheet strength.

Those of you who have been on calls last year would recall that as a management team, we have been very focused on deleveraging. We managed to get it down from 1.4-odd at the beginning of last financial year to 1 put to 0.8.

Then it jumped to 1.52. We're happy that it's back at 1.38, though it is still at a higher level than where we are comfortable in terms of our standalone leverage.

Our consolidated numbers also had a liftoff primarily on account of strong performance of both our refinery joint ventures. HMEL turned in a solid quarter with its if I recall it's one of the best H1s or probably the best ever at least in a long time.

MRPL also contributed strongly in that process. Just to recap, our consolidated PAT last quarter was ₹12,265 negative, and this time consolidated is ₹3,625 crores, a swing of about ₹15,890 crores.

I'm sure you'll have some questions on it. We can answer them, and there a lot of technical details, and Director Finance and Vinod can get into the details.

I'll cover some of the other aspects which you'll be keen to understand. I'm sure you want to know what's happening in Rajasthan.

You've been asking questions, and we have told them that at the right time, we will come out with the right information. We are now at a stage where we can share a lot more details.

As scheduled commercial operation date was declared on 22nd June. We gave a guidance that it will run at around 55, 60% utilization.

It has been running at that utilization. Of course, being a new asset, there are periods in between when you have to take a shutdown or do some minor tweaking, but even as we speak, it runs at around 60% utilization.

Almost all secondary units in the refinery are working in hot sync. Only two secondary units are left for hot sync.

One is VGO DHDT, which probably will get hot synced by this weekend. Then there is another one, which probably is in the final stages and get hooked up before Diwali.

Post that, we will be completing our sulfur recovery unit and taking up it to full capacity. We had given a guidance of quarter 3 that towards end of quarter 3, we will run on that give or take a week or two.

We are holding on to that guidance. Sometime towards the end of quarter 3, sometime in December, we will touch the refinery.

We're hoping to touch the refinery throughput at a run rate of 8 to 9 mmpta. The GRMs for the quarter were $12 for quarter 2, but that's again a lot of stop and start.

In the current month, they are 16 These are net of SAED because it's for HRRL, RTP matters. It's currently 16% 16% plus, and we are still running on low sulfur.

Moment we move on to high-sulfur crudes, which the refinery is capable of, with the current level of assumptions, this will be 20-plus in Q4. Petchem is on track as per later guidelines with first of the units starting to come onstream towards quarter 4 of this year.

There has been another major development on HRRL. Post the commissioning, we have significantly altered the debt structure of the company.

We have refinanced the entire debt of HPCL, ₹45,000-₹50,000 crores. All agreements were signed end of September, and from October 3rd, it has taken place.

The entire debt has been restructured, and we are probably about 105 basis points lower than what the original rate of. It will give in an annual benefit of about ₹470 to ₹500 crores.

Actually, the benefits start flowing in from October 3rd itself when the revised rates got applicable. Third part has been equity infusions.

We have been further capitalizing and infusing equity. Government of Rajasthan infused ₹1,500 crores of equity in this quarter, its share.

Correspondingly, HPCL converted ₹4,300-odd crores of the subordinate loans into equity. This itself will lower the interest burden about ₹350 crores.

We are expecting to make further equity calls in the next one or two quarters and getting the total debt burden down. An apple-to-apple comparison would say that we'll probably get the debt burden down by 1,000-odd crores in the next Sorry, interests, not the debt burden.

I stand corrected. Thanks, Srividya.

The interest lowered ₹1,000 crores, which is a significant improvement over last year. In terms of working capital, we've got rework capital limits revised now that it's an operational refinery, the rates lowered.

We've also got the state is committed for about ₹1,100 crores of interest-free loan per annum for I think a 15-year period or something. That money has started flowing in.

Already, we have received the first tranche. They're giving it in three tranches every year.

We've received the first tranche of ₹375 crores, and the next one is due next month. A lot of effort has gone into restructuring the financials now that the refinery is in operation and getting it leaner so that we can turn towards more profitable operations or quickly come to profit.

Overall, we are working on both physically and financially making the asset work for our shareholders. We are very excited on Rajasthan.

We are very bullish on it. All of us monitor it on a daily basis.

Just for context, yesterday, 15 TMT of product actually was shipped out of that refinery. 3 months ago, nothing was being shipped out.

In October, we will ship out over 400 TMT. Translate that into revenue, this asset will produce a revenue of over ₹4,000 crores in month of October itself.

If the luck holds it, again, I'm just saying it sharing our excitement rather than as a guidance, just in month of October, we expect to be PBT positive on the refinery. This is not a guidance because it's in early stages.

The numbers change month-on-month depending on which crude we are running, but we are very excited to see an asset of this scale can turn in a PBT-positive month so early in its cycle. Bodes well for how we are planning about it.

Moving on to the other big asset, RUP, it's working steadily. As you all know, we've had challenges in adjusting to the technology.

It's the first unit of this technology globally. Even the licensor is finding it difficult to fully stabilize it, but we are getting there.

We have been able to consistently run it at 60, 70% capacity, and we are gradually improving our understanding of the asset and how to take it into the sweet spot zone. With all the efforts we have done, I think we are getting there.

You will have a logical question. Is it giving the $2 to $3 uplift?

No, not as yet, but we would get there. There are periods when it's touched close to a dollar per barrel uplift.

In October, we are expecting 0.65, $0.7 per barrel uplift and translating to a GRM of about ₹500 crores. It's starting to spin off money, not as much as we want, but we will get there.

Two focus areas, needing to increase the utilization, gradually upping it, and making it more consistent so that we can have longer runs in the sweet spot zone. Tough asset, but we are very, very confident that it's going to give us moment we are able to get it into the sweet spot and run it consistently well, it's going to spin off a lot of money.

The third major thing I wanted to highlight was on Samriddhi. We have always declared this in all of analyst call.

This year, we delayed the start to second quarter. In the results, we have already declared that there is ₹327 crores of accrued numbers, translating to about $0.18 per barrel.

On a run rate basis, we have locked in about ₹600, ₹700 crores because I'm sure you would have a question that are we going to meet our numbers. We think we will get to the guidances we have given.

This year, we are addressing some of the more fundamental things. Just to give you two examples, how do we aggregate all of our metals buying across, we are doing an initiative on that.

Can we buy catalysts differently, looking at precious, etcetera? All of these, which are fundamental steps in trying to improve the operations, we have also as part of Samriddhi, also done some interesting initiatives of moving intermediates around to release capacities in our refineries.

The fourth major update I wanted to give you was on the digital progress. There is very strong progress on that.

We are just implementing a new supply chain tool, which will upgrade all our supply chain optimization capabilities and make it AI-enabled. That exercise is underway.

We have in the last few months upgraded our crude-buying platform. Multiple AI use cases are being used across businesses.

We are also saturating digital/automation tools across our BUs. For example, using RTO/APCs across all our refineries.

Whichever unit you want to do it, we will complete it this year. Similarly, all our LPG bottling plants are being automated, and by end of this year, we will have smoother operations on those.

Just to give you how prevalent this is, we just ran a hackathon across our organization, a digital hackathon. We had 1,600 participants, which is 1/5th of our organizations, from the youngest to the most tenured and most aged people all participated in it.

There are 30 such ideas which were the finalists, and of which 25 are actually being implemented by our teams internally. Let me move on to few highlights on marketing.

As we have been doing a retail transformation. We call it Project Abhyudaya.

2.0 is underway. The TPO targets, we are actually ahead of the targets, though this year, we are not measuring ourselves on TPO targets because given the market situations, lot of the private-sector volume has shifted to OMC's, but nevertheless, the foundational steps are going on.

There are some other very interesting initiatives which are underway. On non-fuel retail, I'm happy to share that about 10% of our pan-India retail outlets have non-fuel retail activity.

This is up from 5.5% at the beginning of the year. There is significant movement in each of these initiatives, and they are revenue accretive, and some of it will start showing up regularly.

On branded fuels, we remain the market leader in branded MS and also pushing some for last two quarters, we are the market leaders for branded S MS. Last time we had talked about a new product on LPG, Navya, which we had launched.

It's a composite LPG cylinder. All three OMCs have launched it, but right from the day one of the launch till today, HPCL is the market leader on that.

It's a different way we are marketing that. I will also do a sales pitch.

It's booked to cook in 90 minutes. Some of you can order it for your homes.

I'm sure you will enjoy that premium experience. We are on track to target about 1 lakh primary sales on Navya by Diwali.

The other initiative on marketing I wanted to talk about was Chhara. We have increased the flow of cargoes.

I think that terminal now works about 10 months a year. There is still bit of mechanical stuff to be done in terms of aligning breakwaters, etcetera, because the waves are unpredictable there.

We are now starting to unload cargoes. In H2, we are expecting five to six cargoes depending on how the market would be.

It would give us about 15% to 20% utilization in H2. Interestingly, we've also figured out how to make better use of this asset.

Off late, we have been picking up opportunity cargoes backing the asset. Just if I club our Chhara and bulk gas purchase, which Chhara allows us, we are expecting to be cash positive for this whole year.

Not the terminal, but the terminal plus natural gas buying which we are doing, which actually we wouldn't have done if we didn't have the terminal. It's a positive sign, and hopefully, Chhara itself will turn around fully next year.

Touching on the sixth topic on new energies, after our assets got completed last year, the big ones, we've increased the focus on our solar and the green portfolio, but we are only doing it for internal use. We are not doing any third-party renewable, at least the solar or wind.

We now have a line of sight of a GW-plus of portfolio over the next 2 years. 275 MW is actually running.

This looks at wind and solar. Another 270 MW, if I remember correctly, is of solar plus BESS is under construction, and another 500 is under development.

I again reiterate, this is all for captive use. We are not doing third-party renewable.

On CBG, we already have a couple of plants. We have been trying to get our act together in terms of higher utilizations there.

Under the GOBARdhan scheme, we have, if I remember correctly, about 10 or 11 plants we have filed, of which five are under construction, next six are also likely to go. CBG is one area where we are clear that we're going to be building a platform around it.

We've also been focusing a bit on EV charging. At the first effort, we are trying to get our infrastructure of 5,000 500-odd retail EV chargers to be much more effective.

I'll just throw out one indicative number. From beginning of the year to now, our weekly revenues from our charging has gone up 3x.

It's still a very, very small number. It will not move your Excel sheets, but it is exciting for us that from an asset which we had put in place, we have increased the weekly revenue.

We're also continuing our push on CNG. The last point I wanted to touch is a very interesting development we had.

As you all know, we have HP Pay, which is a platform which we have been using for essentially, sort of a wallet for our payments. Some of you might be using it.

Those who don't, please use it. It's a good platform.

We have now got TPAP status on that. We become the first PSU and OMC to achieve the TPAP status.

This allows us to offer seamless UPI payment service and opens up new avenues for customer acquisition and engagement, strengthening our digital ecosystem. There are many who have struggled in this business for creating the platforms, etcetera.

We now have a platform HP Pay which is TPAP-enabled, and we will start deploying it much more widely. Our vision is to transform HP Pay from just a fuel-centric application into a broader digital payment and lifestyle platform around our businesses.

We are not going to do esoteric things, but around our businesses, we will use lot more given that we have a TPAP status now. That was a quick summary of where we are.

We do have short-term challenges. Crude, I just checked on the TV screen in my room before coming in, was at 114.

Brent was 114, abnormally high number. We have challenges.

We are fighting them, but in parallel, as you could see from some of the narratives here, we are getting HPCL ready for the future. We are absolutely committed to transforming ourselves and creating a stronger HPCL and creating greater value for our shareholders.

I'll stop here. Thank you for your continued interest in HPCL.

Look forward to all your questions. Those of you who have put in your flash reports on the performance, I received some of them, have gone through some of them.

Thank you for your quick judgments on our results. Thank you.

Varatharajan, back to you.

Thank you for the opportunity. Very good morning, sir, and congrats on a strong set of numbers.

Just wanted to understand two things. Firstly, as far as the crude sourcing is concerned today, not just the mix, I just wanted to understand what is the effective cost that we are basically sourcing crude at, in the sense that how much of a inherent premium is now built in, if we assume Brent as a benchmark?

Brent plus how much dollars a barrel are we having to pay as Indian companies? Any range you can share that will be very useful.

That was one, and you said two things.

Yeah. The other thing was basically in terms of what is happening in Q3.

You did mention that the short-term challenges. There's obviously been quite a sharp reversal back to fairly high marketing losses, I would presume, as well as higher crude costs and LPG prices.

If you can kindly share what was sort of the average LPG price that we saw in Q2, and what are we seeing right now, and how much impact does it have on the outstanding subsidy losses as far as LPG is concerned? Just the general operating environment, how it has turned in the third quarter so far?

Okay. Great.

Good, Probal, and thanks. We in our place have a wager on who is going to go first, now the good point is nobody puts in wager because your question is always the first one.

Thank you for your continued interest in HP. Two questions.

Crude sourcing, I wish I could give you a straight answer on this one. Actually, I would say crude sourcing is like the Wild West right now.

It is very unpredictable, very volatile, which actually makes it difficult for stable companies like ours to work on it. I'm very proud the way our processes work.

I'm not going to give you the specific numbers, but you'll be astounded to see sometimes what kind of discounts you can pick up on something, and yet the freights are very high at time. It's a very difficult thing to predict.

For same cargo, I'm just give you an example, cargo X floating around being offered at a particular day, 3 days later, it goes $10 higher just on the premium. 5 days later, it might be cheaper.

The timing has become a lot more. I think what is more important is how it has shifted, the pattern has shifted.

We used to buy a lot term and actually a lot on FOB. These days, the way we are looking at earn and also how the market is shaping up, we are buying a lot on delivered.

In fact, almost everything is DAT basis right now because at the end of it, all of us are conscious in terms of what is it costing me and how does it fit in. The sourcing varies.

As we are looking at what is the cheapest available crude, and there are sometimes when you have to really look at emergency crude purchases also because shipping lanes are very disrupted. It'll be very hard to discern a pattern from this.

All I can say, the crude premiums and landed costs if you look at it, there are times when there are premiums, there are times when you can even pick it up at discounts. It's a very Wild West right now.

On Q3, obviously with the high crude prices, they are a challenging number for us right now for everyone. We do hope it comes down.

It is obviously leading to under-recoveries. You guys are good at math and can quickly do that.

Specifically on LPG because that's a much more widely recognized number. Just to give you a sense, October under-recovery was ₹245 per cylinder.

November, it has gone to ₹327 per cylinder. I don't know, Shrive, you have the Q2 number on?

The total under-recovery for Q2 has been close to around ₹500 crores has been the under-recovery, and the buffer has increased to ₹18,049 crores is the total buffer balance which we have, which is receivable from the government.

I'm sorry, the audio wasn't clear. November, you said the under-recovery has gone to ₹340 per cylinder?

₹327 November, ₹245 October.

Understood. That is good.

Got it. Sir, one last question if I may slip in.

Again, staying on the sort of crude purchases, what you did mention obviously makes more sense. As a trend, effectively, is it fair to say that the effective premium on whatever benchmark crude, whether it's the Indian basket or Brent, there is obviously still an inherent premium that is there on the delivered cost of crude, much higher than what it was maybe even 3 months or 4 months ago?

Is that a fair way to look at it?

Very difficult to make that judgment. It is so volatile.

It's very difficult to make that judgment.

Fair enough, sir. Fair enough.

I won't say yes or no to that statement because if I say yes today, and tomorrow it might be different. It's actually a very volatile situation on how the market is reacting.

Got it, sir. Thank you for your answers.

I'll come back in the queue. Thanks a lot, and all the best.

Am I audible now?

You are currently receiving compensation for LPG under-recovery still end of March '25, about ₹660 crores a month, right? That's been a very helpful thing from a working capital standpoint.

Is there any dialogue you've opened up with the government for extending this compensation beyond the current month? That's question one.

Secondly, did I get this right on the Vizag upgrade commentary? You said that the current uplift is between $0.6

to $1 a barrel?

You are targeting the full benefit of the upgrade, last time you had said March, right? Is that still on or is there any change in the uplift that you will get for that?

Thanks.

Great. No, thank you, Vivekanand.

Thank you for the questions. Yes, you're right.

We said 0.7 to 1 and we gave the guidance that this month it will be 0.7, and we hit one in a period sometime ago, depending on crude prices and other things. It's literally turning in say 40, 50% of our expected benefits right now.

In terms of full, I think the guidance is exactly what we had said earlier. We are holding towards that.

Having said that, we've been very transparent with you all in the calls that this is a really, really complex asset to look at it. It's like double or quits kind of thing, it is going to give a lot of money, but it is a challenge.

Everybody's mastering to run that asset. We are getting there.

We are hopeful of getting there in March or even before that, but we are not going to start screaming at our people if we get there in April, because everybody's trying their best to do that. Once it gets stable, nobody's run this technology globally as yet.

Even licensor is finding new things, but we are getting there. Every month is better than the previous one.

That gives us hope. On what's being discussed with the government, I don't think this is the right forum for me to comment on that entire thing.

I think, as Srividya just said, there is a recognized number of buffer. It was recognized by the government in the past.

There were moneys which were given on the entire thing, and all you can rest assured is the management of your company and other companies are all taking the efforts which are required. What specific dialogues are going on, I will keep that outside.

It's not the forum to discuss those. Not my remit to also comment on what government is going to do.

All efforts are being made, is all I would say.

Sure. Just one small follow-up on the Vizag upgrade.

You said that the complication is on the technology and stabilizing it. Can you give a bit more details on the markers that you're monitoring as far as the licensor and you are concerned in ensuring that you can get to the two markers, utilization and then consistency?

Those are the right ones we are looking at. See, it's a high-pressure, high-temperature reaction where you are taking some of the hardest bottom-of-the-barrel things and breaking it up.

If there is a follow-on question, then I'm going to ask Bharathan ji to answer because he's going to give you a long technical answer on it. I think we are figuring it out how to keep all parameters on the reactor in control to make sure it gets to a consistent run.

That's a layman's way of looking at it. That's why I'm answering it.

They are technical question. We can have an offline discussion also with Mr.

Bharathan. He'll give you a very detailed answer.

We are getting better at predicting a operating parameter of this will lead to this. Remember we've told you earlier that we've deployed a digital twin also.

As we're populating the digital twin also on this, we are starting to get better and better at that entire thing. Any deviations on high pressure and temperature, we are able to catch them earlier and keep them into the control zone.

There's nothing wrong with the reactors, there is nothing wrong with the infrastructure around it, but it's just that you have to go through this stabilization period because it's a highly complex asset. In Rajasthan, we took lesser because that's the parts which are operating is it's a simpler refinery that way.

This RUP is a much more complicated asset. We are getting better.

It's about operating parameters, and we're very hopeful that in the next analyst call when we do quarter 3, we'll be able to report higher utilization and higher GRM impact.

All right. Thanks, Vikas, for the detailed answers.

All the very best.

Good morning, and congratulations on good set of numbers. I have two questions.

Firstly, if I look into your unit cost per barrel in terms of both raw material cost as well as purchase of product, what we notice is that between Q1 and Q2, there is almost a $30, $40 per barrel decline in the sourcing cost despite dated Brent declining from, say, around $104 to $97 per barrel. There was sharp reduction.

I was of the view that Q1 could have had older crude which were sourced way before the crisis happened, and that's why the cost would have gone up QoQ, but somehow it seems to have fallen. Any color on that?

Yeah. If you recall the last analyst call, we did talk about the fact that we carried a bit more of inventory at the end of quarter 1 because the units had stopped in between, primarily from the RUP, we carried a lot more inventory where we had taken a mark to market.

That actually helped us a bit in July. If you have any specifics, then I can ask Shrive or Vinod to give more details.

No, Is that you are able to benefit from that timeline, right, when there was some sort of cool-off that is towards the end of June and probably early part of July and also some part of August, was that the reason?

Yes, exactly. Exactly.

We had actually, if you look at how the crude cycle went, September, the crude cycle turned again. July and August, it was reasonably okay.

End of August started turning so that the September deliveries happened at higher price. We actually had very, very strong July and August.

It's September which probably had a minor negative impact or pulled down the numbers. Otherwise, July and August was very, very strong for us.

Primarily based on the momentum we carried from end of June.

Got it. Thank you so much.

Second, just a couple of small questions. First is this ₹470 crore of share of profits from associates and JV, how is it distributed between HMEL, HRRL, and MRPL?

See, HRRL is not giving anything right now. It's the first year.

We are not even anticipating anything to come out of it. It is going to be a negative on our numbers, consolidated numbers, in the next year.

Lot of it is between HMEL and MRPL. Maybe, Srividya, you might have some numbers.

Right, got it. It is HMEL and MRPL only, which is, yeah.

Yeah. 1,300

for the HMEL, it's ₹1,300 crores for H1. 1,300?

₹1,300 crores for H1.

₹1,400 crore for H1? That is HPCL's share, right?

Yes. Yes.

₹1,300 crores.

1-3. 1-3, na?

Fair enough. That's all from my side.

Thank you so much, and all the best.

Thank you.

Hi. Thanks for the opportunity, and congratulations on a strong result in this environment.

Just a first question on HRRL debt. You mentioned that it has been restructured and interest cost came down by I think 105 bps you mentioned.

What are the changes in the terms of the debt? Also if you could highlight if any corporate guarantees have been provided from your end to kind of bring the interest cost down?

The net end result was it is the same terms. See, earlier it was project finance, we shifted it to operating.

In the end, it was I'll not go through the whole journey because there were different techniques used in between, but in the end, it was mostly the same consortium, same terms there. Three new bankers were introduced in it to balance out.

Those were the schemes. You leave it to us in terms of how we handled it, but in the end converted project finance to operating and by induction of three new bankers.

Every banker also wants this asset on their books, no? You could use that to get a lower rate.

No corporate guarantees at all.

No corporate guarantees. It's the same whatever were the earlier agreements, same hold true.

Sure. Got it.

Also on the Vizag RUP unit, I believe in case the asset kind of takes longer to stabilize, it's already been quite long time. Just wanted to understand, is there any penalty clause or anything on the technology provider for, let's say, if the delivery of the technology doesn't come through?

Yeah. Two parts to it.

One, there are obviously all these contracts have penalty clauses, but we are not even remotely hoping or planning to invoke any of those because the licensor is working with us, and we are very close to the sweet spot. It's not that technology is not working.

It's just that the parameters have to be there. You also have to realize that in this period, even the feed which has to go in, see, we were never able to predict the best available crudes from what we would want to optimize.

We were running crudes at time. Sometimes the crude has lesser optimum parameters there.

It's not a case that, oh, technology is bad. It's just that it's taken a bit longer to get it stabilized.

We will get there, and we are very close to the sweet spot. We are not even remotely thinking on, oh, licensors this and licensors that.

They are hand in glove. There is a lot of experts working on it, and we know the day-to-day improvement on the entire thing.

Between Director Refineries and me, we keep an eye every day on it, and it's getting better and better. We're going to see the flowers of this investment come out very soon.

It's not that the technology is bad. It's just getting there.

It's taken a bit longer to get there. That's it.

Got it. Got it.

That's helpful. Just the last question, if I may.

On the Rajasthan refinery, by when do you expect to achieve optimal utilization and operating rates, particularly given the strong refining environment right now?

At the earliest, as you can imagine, because we also understand the strong refining margins. That's why I made that comment that October could actually be PBT positive for the refinery, which for a greenfield refinery in the first 4 months of operation would probably be unheard of.

I can't think of too many examples of people getting to that. Having said that, we're hoping to stick to the guideline which we had given in the last analyst call that by end of quarter 3, the refinery section will run at full steam.

There's only one unit which is to be completed. That unit is going for audits just around Diwali time, and commissioning cycle will start.

It takes about 1 month to commission it. Sometime in December, we shall start getting the high-sulfur crudes in once that unit stabilizes, and we will run it at full refining capacity at 8 to 8.5 million tons per annum equivalent run rate we'll be able to run.

Petchem numbers will kick in later, but given where the cracks and the product prices are right now, we are less worried about petchem numbers because we have that window of next 6, 8 months if we can just sell diesel, LPG, naphtha, etcetera. Even naphtha is getting good prices.

We can get good margins flowing in, and we want to absolutely capitalize on this window.

Sure. Thanks a lot for the detailed answers.

We'll come back in the queue. Thank you.

Thank you for the call, sir. The first question was I think an addition to the earlier question around freight rates, sir.

What are you seeing in terms of increase in freight rates for December loadings versus what you would have seen for the last quarter? As you said, a large part of your cargoes are on DES basis.

Can you give us a percentage of what it was in DES in September quarter versus what you're kind of getting for forward loadings beyond December?

Yeah. I think the team is just trying to see if we have the second data on the second question.

On the freight rates, if you look at from quarter-to-quarter basis, definitely, there is an increase in the freight rates. Srividya is showing me some numbers, maybe she'll read out some numbers and give you the data.

There's definitely an increase in the freight rate. Mayank, what's also very interesting is the impact on landed prices might not be as much as you guys might think from outside because see, the producers of oil are also stuck.

At times, the astronomical freight rates which you see, you can actually, if you strike a good deal, you can get it almost managed on the producer. The netback to the producers in many situations, especially those who are stuck or where there is stranded oil right now, the netbacks are much lower than what is in the public domain in terms of netback.

On terms of how much is DES, again, I don't know the specific numbers, and I've asked my team if they have the numbers specifically. Maybe Srividya can give you details.

From our practical purposes, right now, almost everything we are looking at landed basis, except where we think we can send a ship and pick it up cheaper. Earlier it would have been 50-50 or even less than that would have been landed delivered at my thing, but right now, it's also partly we don't want to take the risks of somebody hitting the ships on the way, etcetera.

A lot of it becomes easier for us to think in terms of landed. Maybe, Srividya, you'll have some things to add.

Yes. Just to add to it is that the freight costs have almost doubled between Q1 and Q2.

That's the overall guidance which is there. For Suezmax, which was probably coming at around $4 per barrel, has now gone up to even $9 per barrel.

This is the kind of the increase which has happened as regards the freight rates are concerned. As Chairman was mentioning, yes, we are looking at most of the cargoes only on a landed-cost basis, and so the freight rates are really increasing.

Got it. I think the second question, ma'am, to you was also related to the capital structure of Rajasthan refinery.

In a year or 2's time, when you want to kind of stabilize the capital structure, where do you think the net debt kind of sits, and the ratios kind of sit on the capital structure?

Yeah. Mayank, we haven't yet done that projection.

Maybe by next analyst call or whenever you have a chance to meet you separately, we can have a discussion on that. Right now, we're just ranging it into the initial project things.

We have not yet got to a level on how fast we can get the debt under lowering the debt. It'll also depend on if diesel cracks hold like this for a year, then we'll be actually in a very, very good position considering this refinery is going to put 4 to 4.5 4 million barrels 4 million tons per annum.

Yeah.

Okay. I think just on that, I think if you kind of look at your October, as you said, you're break even at PBT, what was the GRM you're getting in October for Rajasthan?

Hello.

Can you hear me?

Sorry, folks, we got disconnected, and there was some trouble in getting reconnected. I don't know, Mayank, if you caught the answer fully, if there is something which is not answered before we got cut off.

No. Vikas, I think you were talking about the capital structure change, and I think it got disconnected from there.

You said that you're still working on it, and then it kind of stopped.

We'll handle next quarter on it. Right now, we are very focused on just trying to see where the physical production numbers land.

See, as I said earlier, we're starting to evacuate 400 TMT. Now we have to just make sure our own supply chains, everything is there.

Pipelines are working fine. A lot of effort has gone on to that.

We've started to look at profitability. I did comment that October we are hopeful of a PBT-positive October, which is it won't be the guidance for the whole quarter because there will be the flips around it.

Next quarter, we'll give you some broad sense on how we think the debt repayment would happen. Once we have an You just

want to give us the GRM for October?

October, I already said first 18 days was 16 16.1 or somewhere post-SAED. It was 12 for quarter 2, now 16 running at 16 currently.

Post-SAED. Okay.

This is on low light-sulfur crudes. We'll probably be able to flip to HS in December.

That will give another lift-off of few dollars. Once we do that, we anticipate at today's prices and cracks, etcetera, a 20-plus plus run post-December.

Got

it. Thank you.

We're quite happy how it's shaping up now. After obviously, the blues we've had, but a lot of effort has gone into just getting everything back.

If you guys track the sector, you can map which refinery in India got all the units literally going in 3 or 4 months. I think that our team has done a fabulous job on that.

Thank you. Congratulations on

that.

Yeah. Ma'am.

Yeah.

Just once we get a little more of clarity on the cash flow projections, on the consistent refinery performance, then I think it would be the right time for us to look at how do we debt repayment and then how do we bring down the debt-equity ratio from 2:1.

Sure. Thank you.

Hi. Thanks for the opportunity.

Sir, you just mentioned about Chhara terminal's utilization and you have some of this long-term contract which you have signed in the past. All this volume at Chhara that is part of that long-term contract or are you booking a spot cargo and bringing the volume there?

It's a mix of those. The long-term contracts actually initial few years were slowly ramped up because we did not want to overcommit.

Also, there were disruption in long-term contracts in a couple of cargoes. Off late, in the last month itself, we've done two or three spot cargoes.

As I mentioned, having that asset actually is giving us a lot of flexibility on opportunity cargo. Just 2, 3 weeks ago, we picked up an opportunity cargo at a significant discount to the market because nobody else in India had the ability to absorb that cargo at that time, and the seller needed the ship back.

It's allowing us to play the opportunity game quite well. We are happy with the way it's shaping up right now.

Of course, we want to get the utilization to reasonable levels, 20, 30%. At that, I think a terminal combined with your gas sales gives you a lot of flexibility and opportunity to make money.

It's shaping up well.

Got it, sir. Sir, and the last question which you said that HRRL ramp-up, which you are probably looking in a quarter or two complete full ramp-up, at that time, when a full ramp-up takes place, what kind of GRM you are looking higher than the, let's say, benchmark GRM?

Whatever the benchmark GRM at that point of time, what can be the uptick, higher number for the HRRL given you have some state incentives are also part of the project? What number one should take it for the HRRL?

See, right now, to question Mayank had asked earlier, we had just given a broad sense that it'll be upwards of 20. We have not yet added the state incentives and all those calculations, but see, once the refinery settles down, just purely on the refinery section, we can then focus on getting our operating costs down, our energy efficiency even sharper.

The results will start coming in. It's a very, very advanced refinery, and moment it settles down, it will in near future, it will start giving results.

I already gave the answer to Mayank's question earlier that we're looking at 20-plus plus, and that's till now, we have not done the calculation of state incentive means this and that. We're just looking at a broad crude-to-product equation and saying at least a $4, $5 lift-off on the October GRMs.

It could be more also.

Got it, sir. Thanks for the opportunity.

morning. Thanks for the opportunity, and congratulations on good set of earnings in second quarter, and a really strong recovery after a weak first Q.

Sir, my first question was with respect to the refinery environment. If you can give us some perspective because the waters are quite muddied.

On one hand, there are strong cracks. On the other hand, there are higher freight rates.

If you can provide us some perspective how to read this refining environment, and how long can we see elevated cracks? If you can help us understand that, that's one.

Secondly, in that backdrop, do we see structural changes in the refining cycle as such, and what kind of mid-cycle refining margins can we expect especially for Rajasthan refinery?

Okay. I think on the refinery outlook, if you read the reports, they say this is the golden era for refining.

Again, the diesel cracks and some of the product cracks are definitely high. Again, we are not in the business of forecasting those things.

I also read the same documents which you read, and so do my colleagues here. We believe the cracks would sustain.

At least, they will not come down significantly during the winter months, given all the political stuff we have. I have no better way of crystal gazing on cracks than you might have, or any one of us.

We can all do our own little projections around it. We do ex-

Hello? I think the line is again disconnected for the management.

Sorry, we got disconnected again. I was just saying that for a company which does not do exports of bulk products, frankly, only part of that benefit comes to us.

On Rajasthan also, see, all the product from Rajasthan is going to be absorbed by HPCL. It's just that it's our own refinery.

The way we are looking, it's just structured as a joint venture and hence, maintains a separate book, or you can say a separate project SPV. All that will go towards meeting our shortfall or our refining-to-marketing gap.

With these projects fully coming in steam in the next quarter or two, HPCL will be self-sufficient on its own product, and very little will be needed from outside. We're hoping for that situation soon, and that will allow us to be more flexible in the market.

What happens on the cracks 6 months down the line, 12 months down the line, very difficult to predict right now.

Sir, appreciate that clarification. Just I asked about the mid-cycle refining margins because I wanted to understand the motivation for equity infusion at this juncture in Rajasthan refinery when our own profitability in the first half hasn't been very strong.

If you can just help us understand that. Essentially, what's the total equity that we have infused so far in Rajasthan, and where it's going to land after you've completed your equity infusion plans?

See, all the moneys which HPCL has to put in into the project have already been putting. I think there is only ₹200, ₹300 crores which is left for commitment on the entire thing.

All the moneys because it's a joint venture and we have to maintain a ratio of the joint venture, when the Rajasthan government commitment hadn't come in, that money had already gone in as a subordinate loan, which was sitting in the books of HRRL. That is being converted.

No fresh equity is being put into the entire thing from HPCL's side. Moment Rajasthan government put in ₹1,500 crores of cash, we converted our subordinate loans to this, and remaining ₹1,600 crores also which Rajasthan government puts in, the corresponding amount will be converted.

I think HPCL has a balance ₹300, ₹400 crores left to put into the project for meeting the overall project finances of ₹79,800 or whatever 500 number, which was approved by the Cabinet, Government of India, and which is in public domain. No fresh cash has gone into the entire thing, but restructuring allows us to lower the debt because Rajasthan government infused in ₹1,500 crores of cash.

We converted 42 to ₹4,300 crores equivalent of 74:26 ratio, and that allows us to lower the subordinate debt interest. That's what I meant by financial restructuring on this.

It's not that we have pumped in fresh equity. All we have to pump ₹300, ₹400 crores has already gone into the project fully.

Understood, sir. That's helpful.

My second question was again on refining margins. If you can help us with the refinery-wise refining margins that you used to give, if you can give us a breakup between Mumbai and Vizag?

We have been giving consistently what we have given this time, and we committed to all of you that we will consistently give the margins, and we will give it at this level. I don't want to get into refinery-wise breakups.

All right, sir. That's all from my end.

Hi, sir. Very good morning to you and your team.

Firstly, sir, I have to tell you that congratulations. You guys have done a splendid job in a very tough environment, which is far beyond anyone's control.

Very well done to you and your entire team, sir. Sir, I just had a couple of things which I've wanted to get my head around.

With your complex refineries now running and your residue upgradation of Vizag as well, is it possible that we can source a very heavy discounted crude from countries like Venezuela, which are heavy sour, which earlier only companies like Reliance could process, but now you are as capable as them, too? That can kind of offset some of the high crude pressures which are from the other regions.

Sir, secondly, is my understanding correct that you said that by Q3 end, hopefully, Q4, the Barmer refinery should be fully up and running, which basically means that our dependence to buy product from other refiners would completely cease? Which basically means that we'll be fully integrated as a company as our refining throughput, marketing throughput would match.

Is that understanding correct? Sir, one question now, this is more from an investor angle and not necessarily from an analyst.

When the Ukraine-Russia war started, there were thoughts that this could prolong for 1 month and 1 year, but this has been on for far. Now when this war has gone on, this has been the seventh or the eighth month.

Frankly, nobody knows this, right? It's an unknown.

What are your thoughts on this, sir? Because if crude kind of stays elevated for longer periods of time, how are we thinking about this, because it's definitely going to affect the overall business side because we are not in the business to kind of subsidize fuel to such a strong level.

How are you looking at all these things, sir? It'd be much appreciated to get your thought.

Good. Thanks, Sumeet.

I'll go question by question. First, can we do more heavier crudes?

Absolutely. That's the intent we are moving towards.

Even in Vizag, we have run Venezuela already. Of course, technically, there are some changes you always need to do, but we are even figuring out how we could blend it even more and more.

I'm not so sure, and Bharathan ji, maybe you can add if Venezuela for Barmer might be easy because of the pipeline transfer, because heavy crudes might be more suitable for a coastal refinery.

Heavy crudes along with the more bottoms, it also comes with other properties like high viscosity, acid number, and all. Overall basis, we'll have to see.

We keep it in our basket, and evaluate as per the economics whenever it is possible to be processed.

Barmer, it might be difficult to transport a very viscous

crude.

We are, Sumeet, to your question, always looking for those opportunities, and we have already run some Venezuela in the previous quarter, and we could figure out how much we can blend with other things, and to increase those blends, what are the technical changes which we need to do. All those things are being planned for there.

Given the three refineries working now, it also gives us flexibility of where we will store crude, etcetera. Those all avenues are being explored.

I think that was your point number one. The second question was?

Just remind me of the second question.

Sir. The second question was more that once your Barmer refinery is fully stabilized, our dependence on buying product from other third parties will cease, is that correct, sir?

Yeah.

Once Barmer is online, the throughput is there, then the entire requirement of HPCL should be taken care of from all the two refineries which are there on the HPCL, as well as the two JV refineries which we have, the HMEL and the HRRL.

I think we'll be able to get 95% of our requirements. There might be some small pockets here and there where it is better to take from a standalone refinery, but our portfolio will move towards internal, whether on our own balance sheet or through the joint ventures.

Sir. That's very helpful.

Sir, just lastly, just your thought on

Sumeet, can you repeat, please, because your line was going bad.

Sir. Sir, firstly, thanks for answering the first two.

Now, on my third point,

No, I got reminded of the question, I can answer that, Sumeet. I think if the crisis goes long, I think it's not only a question of what will we do as a company, but it's also a broader macroeconomic question for country and countries.

I'm sure there will be lot of thoughts being given to this at various levels. At company level, we give it a thought, but I'm sure government and other governments are also giving thoughts on how to look at it.

Obviously, the current prices of crude and the way situation is, is not sustainable. We have seen what has happened in parts of Europe where economic costs have gone up and costs of living has gone up.

I'm sure governments across the world are conscious of that entire thing, and if this persists for a long period of time, then something will give away somewhere. From our side, we are trying to look here how best we can manage it in the short run and obviously, share our perspectives on the situations with key stakeholders as required, including with the government.

They are also fully aware of all our perspectives at various points of time. There is to collectively manage that.

Sure, sir. I wish you all the best and good luck, sir.

Thank you so much.

Hi, sir. Thanks for the opportunity.

My first question is in the net profit figure, in the notes, there is this mention of Visakhapatnam refinery having net profit of ₹2,800-odd crores. In the total net profit for this quarter of ₹3,600 crores, does Mumbai only contribute ₹800 crores?

That's my first question.

See, this is the number that the auditors are required to report when there's a branch auditor who's different from the corporate auditors. When you do a consolidation, there'll be a net off of the profits between the entities, and that is forming part, not exactly the difference as you speak.

We net that off, and after making intercompany adjustments, that forms part of the consolidated

And the marketing margins as well.

Yeah.

Okay. My second question is related to HRRL and HMEL.

They have now been connected via a gas pipeline network from GIGL that goes to Bhatinda, that connects to HRRL. Are we expecting to see some benefit of having some gas feedstock in the near future?

We're already using gas. HMEL is connected to this pipeline.

It is also connected to another pipeline. It's connected to two pipelines, if I remember correctly.

It is already been sourcing for a gas for a long period of time, and HRRL is also already sourcing gas. We do all those analysis.

On the days it is better to run naphtha, we run naphtha for our feedstock or for our SMR, etcetera, and on other days, we run gas. That's been done literally by our teams on a daily basis.

That part is working already.

That is it from my end. Thank you.

Hello?

Am I audible?

Yeah. Sir,

first of all, thank you for the opportunity and for such a great outlook also for the company. My first question was, what is the capacity utilization percentage of HRRL Rajasthan refinery in Q2, and when will the production of PE and polypropylene and other petrochemicals start?

Yeah. See, capacity utilization for Q2 is probably not the right benchmark to look at it, because when you start a refinery, you run it for few days, then there are some small kinks you have to improve and all those kind of things.

I would say from September onwards, after removing some of the kinks, we have been consistently running the CDU, and as I said, it's running at about 55% to 60% utilization, which we had already given as a guideline there. For last 2 months, it's been running at 60% utilization, and we hope to maintain that trend.

On polymer, propylene will come in a bit earlier. The cracker of polymer is under the commissioning cycle.

It takes 6 months to start a cracker. We are already in that journey.

Somewhere in Q4, we are expecting to have the DFCU, as it's called, the cracker unit on petrochemical started. It actually is a 6-month cycle.

We are not expecting benefits of petchem production, barring propylene, to happen in this financial year. With the diesel cracks and LPG, etcetera, which is needed here, all the product will be evacuated.

We have schemes done, all the homework done for evacuation of all those products.

Basically, from next financial year is when we'll see the benefits being contributed?

Yes.

Clear. My next question was since the debt arrangement of I think around ₹51,970 crore for HRRL was refinanced in the Rajasthan refinery, what was the average interest rate for this refinery loan earlier, and to what percentage has it been revised now?

Basically, how many basis points did we save in the interest rate?

I think we don't need to have those details from your perspective. We gave you the guidance that 105 basis points was the reduction we've had on the entire debt.

On the entire thing. Okay.

Yes.

The next one is, even though the Brent price has been higher, how did the GRM increase from USD 8.79 in FY '26 to the USD 27.89 in Q2 of FY '27? Was there any one-off reason for this?

We were doing a lot of hard work, na? No, earlier in the call, we clarified that we carried more inventory at the end of June.

We had clarified in the June quarter analyst call also that we did carry more inventory, and we marked to market all the inventory. June end was a lower price.

We did benefit a bit from lower price opening inventory in July. As I said earlier in the call, we had fabulous July and August.

That helped take up the refining margins. Obviously, at the same time, you have to give credit to our refinery setup.

They ran a very good solid physical performance in a very tough environment, which allowed them to capitalize more in terms of the small, small things you do. This product more, squeeze in a bit more money here and make more money there.

A lot of that optimization was done by our teams.

Got it. You mentioned the lower inventory.

Was it because of the discounted purchase of

No, it's just a follow-up question to this one, actually. It shouldn't take long if the board allows.

That crude was with us, and the prices fell, and we had to take a mark-to-market. That was inventory in our tanks at that point of time in June 30th.

Okay. It was not Venezuela crude?

Or was it?

This is too technical, yaar. Leave it to us to run the refineries, na?

Okay.

Am I audible?

Yeah.

Yeah. Thank you for this opportunity.

Basically, I want to understand what is the approximate time lag between your crude procurement

Yes. Am I audible now?

Go ahead.

Yeah. Actually, I want to understand what is approximate time lag between your crude procurement and the time you actually process it.

Basically, let's say you process the crude in April, and I want to know how old is the crude that is used for processing. Is it for Feb

is it of Feb, March, or Jan? West Coast is 30 days, probably 30, 35 days.

For East Coast, it's about 45 days, approximately, and HRRL will be slightly longer because you have to account for a pipeline transfer in between.

Achha, 45 days for what?

East Coast.

East Coast

rough numbers, sometimes it can be slightly more or not, but average, there's 10 days extra for East Coast.

Okay. My second question is on, what is the approximate days of crude and petrol, diesel inventories do you hold?

We have enough, yaar. Don't worry about that.

It's not much of a consequence on financials. We have enough to keep it.

We're keeping our standard stocks on all of those. So 20?

20 days.

Roughly 20 days of product, and then there is crude. There's also line packs, etcetera.

We are keeping the same ratios which we were doing earlier. Of course, it change for any operational parameters which have changed at our end.

Achha.

Okay. Thanks.

Thank you.

Do you have closing comments if you have any, sir?

No, I would just like to thank everybody for their interest in HPCL. If you have follow-on questions, do reach out to our finance team.

They'll be happy to answer those. If you have any suggestions and even critique for us, please share it with us.

We will be very happy to hear your views and learn from your perspectives. Varatharajan ji, thank you for hosting this call.

Thank you, sir. Thanks everyone for attending the call, and for the management for a very, very detailed discussion.

Thanks, everyone, and an advanced Diwali wish for all of you. Thank you.

Thank you.