MRPL Q3 FY26 Earnings Call - Strong Operational Performance and Strategic Retail Expansion Drive Growth

Moderator, MRPL: Okay. On behalf of. We would like to welcome all the participants to this quarter three results conference call of MRPL. From the management, we have Devendra Kumar Sir, who is the Director of Finance, and we have Subhash Pai, who is Head Finance. And we also have Arvind Gupta, who looks after investor relations. So I would request the management to give a brief overview of the results post, which we can open the floor for Q&A. Over to you, sir.

Devendra Kumar, Director of Finance, MRPL: Good morning, everyone. Welcome to the third quarter call to discuss the financial performance of the company. As you are aware of the numbers published last week, MRPL posted a significant jump in year-on-year, as well as quarter-on-quarter performance this quarter. The EBITDA earned by the company was INR 2,824 crores versus INR 1,064 crores for the last quarter Q3. Last year’s quarter Q3. Healthy market prices, optimum energy consumption, and throughput led to published bottom-line numbers. MRPL posted MBN of 67. MBN is a measure for energy efficiency for its capacity and its complexity. So this was the best number posted in any quarter. The fuel and losses stood at 10.06% for the quarter, which is also one of the best in any of the quarters. Further, current debt stands at INR 9,290 crores, and debt equity stands at 0.63.

If the market remains good, which we sincerely hope will, we should be able to reduce the same further during the next quarter. Further, for the sake of reputation, based on several queries we get often on, MRPL is now well past its summer water blues, water issues due to desalination plant. MRPL is also a unique refinery in India with three separate crude trains that gives us operational and maintenance flexibility with slightly higher fuel and losses. The said higher fuel and losses will also be taken care of within the next fiscal year with grid power project, which will bring it under 10, closer to 9.5, but it will be somewhere between 9.5 and 10. We are also the first Indian refinery that is establishing a bio-ATF plant at a cost of ₹364 crores. The plant will help us to get in compliance with CORSIA norms.

CORSIA norms is for carbon offsetting and reduction scheme for international aviation fuel. And we’ll be able to supply blended ATF across the globe starting from 2027. 2027 is that 1% blended ATF. We have consistently won the prestigious Innovation Award at the Energy Technology Meet, last visit to Hyderabad, four years in a row, including the current year. Efforts of our innovation team will start to show from next year when the IBB pilot plant gets running. IBB is for isobutyl benzene. It is a base for pharmaceuticals. On retail outlet front, we are delighted to announce that we have achieved the 200-mark retail outlet mark and should be able to complete around the 250 outlets within this fiscal year itself.

For the upcoming quarter, the refinery is focused on maintaining its operational performance, and we expect the market to continue to support us, and we should be able to post a reasonably healthy Q4 FY26 also. Now, we are open to questions and clarifications from our investors and analysts. Please.

Moderator, MRPL: Hi, sir. Yeah, Dhaval, you can go ahead and introduce yourself and ask your question.

Yeah, hi. Thank you for giving the opportunity. I understand that MRPL exports diesel to Europe, and there is an EU sanctions package that comes into effect on January 21. So can you help me understand what is the situation in terms of sourcing of crude that MRPL has now, as well as going forward, and whether this will impact MRPL’s earnings by any chance, or will it not be able to export to Europe, or how is that?

Devendra Kumar, Director of Finance, MRPL: We are in strict compliance with all sanctions in place. And currently, there are no Russian crude which is being imported. And we will continue to comply with any of these international sanctions regime or government guidelines. So in the near future, we do not expect anything to stop our export of finished products.

Okay, that is really helpful. And the second question I had was in terms of I do understand you have access to VLCC, but in terms of freight rates, is the company doing anything to minimize this? And the third question I have is on fuel and loss. So you said it is going to be lower in terms of power grid, but is there anything else that the company is doing for energy integration as well? So one, of course, on the freight rates, how is the company managing that? And second, on energy integration, any other programs being run by the firm?

First question first, freight rates. We did see a spike in freight rates earlier in Q3, but the freight rates have gradually come down to the normal level. They’re still higher than the average, but it has come down significantly from its peak. So freight rates are not a deal breaker in any of our imports. The point number two regarding energy integration, see, the location plays a very crucial part. Based on the availability of the kind of energy, the energy mix, we will continue to explore further. Currently, some of our energy is being based on the grid. Availability is being considered. It is already online, and next year, this particular project should get completed. That will bring down the FNL well below 10. Right now, I do not want to put a number to it, but we are targeting somewhere between 9.5 and 10.

We’ll continue to keep improving because grid availability is something which is slightly or majorly beyond our control, although we continue to have interaction with the policymakers and other players in the region.

Yeah, that is helpful. Thank you.

Moderator, MRPL: Mayank, you can introduce yourself and go ahead with your question.

Thanks, Ananda. Hi, sir. Mayank here from Morgan Stanley. A couple of questions from my end. First was in terms of you talked about the crude sourcing changes. Can you just tell us the impact on margins you have had because of these crude changes because you’re not disclosing refining margins anymore? So if you can just give us an idea of what’s the impact on the GRMs that you’re kind of seeing. And second, in terms of costs that you are talking about on grid power, etc., can you just tell us, is there a way you can also lower your costs on the gas source side and how much has been the impact of that, if there is any? And the third question related to was there has been a big of an increase in terms of sulfur prices, etc.

What has been the impact on margins for you, and where do you see those going? Thank you.

Devendra Kumar, Director of Finance, MRPL: Okay. First is regarding the crude sourcing and GRM. If you recollect during half-yearly accounts, that is Q2 accounts, we had taken a policy step that GRM computations and depictions and publications are not standardized by the different companies or in any of the forums itself. So we had discontinued publishing that, and it is also in line with some of the other major PSUs and other companies also. However, we had given an indicative figure that it is double of what was the quarter one margin. It is still similar. It is still in a similar range at a cumulative level. Coming to the crude sourcing part, we have consistently maintained our stance that Russian crude were opportunity crudes.

They always played a marginal that is, they were in our overall strategy, they were always playing a marginal role in improving the bottom lines, but it was not kept as a crucial factor. We did have a margin on Russian barrels initially, and it had come down significantly towards the latter part of the calendar year. So loss of Russian barrels is not going to make a significant kind of impact. Whereas on the finished product side, you have seen the cracks going significantly up. So that more than offsets the loss on account of Russian barrels. And that is how you see a very healthy Q3 performance of the company. Coming to a question two regarding gas, can you just restate that? I did not get it correctly.

So, sir, I think the reason to ask that question on gas was that you do use like LNG prices have been high for most of this year, and fuel oil was kind of becoming the alternative source for most refiners to kind of run the refineries as such. It was much more economical. From a going forward basis, are you seeing any areas where you can actually lower your costs by sourcing cheaper LNG is where the question was coming from?

See, our LNG consumption is relatively low. I’m not sure it’s quite low. It’s relatively low. And we already have a term contract with BPCL, and it is at a significantly competitive price. It is not way above. And in fact, the newer LNG may in fact be higher than that. So I’ll not disclose the final prices. It is very competitively available to us. And parallelly, we are also exploring other sources, including CGDs, including the parent company because parent company also has a certain arrangement with the CGDs, especially in the southern areas where there is some untapped gases. So all those discussions are on. It has yet to be formed up. The commerciality has to be worked out on all the ends, both at parent company level, our level, as well as CGDs, but it is still in its infancy.

So gas costing is not going to be a crucial issue. It is a very marginal issue. Now, coming to the third point, sulfur. Again, sulfur, we still treat it as a secondary risk. It is again treated as a marginal item. If the prices are on the higher side, it is not part of a strategy, but it is all right with us.

Okay. Good. Thank you.

Moderator, MRPL: Yeah. Thanks, Mayank. Kaushal, you can introduce yourself and go ahead with your question.

Am I audible?

Devendra Kumar, Director of Finance, MRPL: Yes, for sure.

Yes, go ahead. Thank you for the opportunity. Sir, I’m a little new to the company. I just wanted to know what is the revenue mix as in like what is diesel, what is ATF? Can you just throw some light on that? And what are the cracks? What were the cracks in quarter three and what are the cracks currently?

Yeah, I’m going to read out the numbers. So I’ll come to the cracks first. The Q2 cracks were comparatively healthy from when we compared it to the Q1. HSD was around 15. ATF crack was around 13. And MS also marginally improved from whatever we were earning in Q1. Further, coming back to question number one, volume-wise, our product slate gives us HSD plus ATF at around 50% and MS at around 15%. And the remaining 35% comes from other products. So this is what a broad level breakup of our product slate is. This also includes 10% of fuel and loss that straight away goes into our fuel part.

Sir, I mentioned the cracks question. So Q2 cracks were around $15-$13, and Q3 was how much is it currently?

Okay, so currently, it jumped from Q2 was 15 and Q3 was 21 for HSD. Similar for ATF and MS from eight to 13.

Currently, how much is it? Like how much is it the ongoing 100? Maybe there’s something you can explain.

Currently, it is not as high as 21 and 13 that I told you. It has come down, and it has moderated to around 14, 15. This is what the current published cracks are.

So from 21, it’s come down to 14, 15. And it’s.

As of now, as of date.

So it’s similar to what Q2 levels were basically.

Yeah, cracks are right now in the trajectory that was in Q2.

Understood. Okay, sir. Thank you very much for that.

For sure.

Moderator, MRPL: Thanks, Kaushal. Akash, you can unmute yourself and go ahead with your question.

Hello. Yeah, hi. So I just want to understand what would be the impact in terms of higher freight rates in the third quarter, maybe in $ per barrel or rupees per oil? And second, relating question, you said the freight rates have kind of normalized right now. I mean, the disruptions still remain, right? I mean, is it normalized for you or the industry, or how to look at it here?

Devendra Kumar, Director of Finance, MRPL: Thanks, Akash, for this question. I’ll be repeating myself. The freight rates were a concern both from investor analyst perspective as well as our perspective. There was a supply issue, but in the current context, other than the Middle East tensions, there is no supply crunch for these vessels. Rates are gradually coming down. It is no longer what it was at the peak in Q2. It has come down significantly, but it is not close to the Q1 levels. So there is a big mix of rates. I can only say in general terms that it is slightly higher than the Q1 rate, but way below the Q2 and early Q3 rates.

Sure, sure. That helps. Yeah.

Okay, sir.

Yeah, that’s it. Thank you.

Thank you, Akash.

Moderator, MRPL: Thank you, Akash. Suneet, you can go ahead and ask your question.

Thanks. Hi, sir. Good morning. Firstly, sir, I would like to, if you take a five-year perspective, can you throw light on where do you see our company in terms of refining, in terms of marketing, because you’re also adding some outlets? So if I take a three to five-year view, can you just share what are your big growth plans going ahead, sir?

Devendra Kumar, Director of Finance, MRPL: From a strategy point of view, we have realized that retail is going to be a big player for a game changer for the refinery. Earlier, it was just like a base refinery, but over a period with capacities coming up in other refineries, so we expect that this is the major area where we need to work much smarter, and that is how we are focusing majorly on retail outlets because the margins available on retail are superior to what you get only at the refinery transfer, and in fact, export sales can be a little volatile. Occasionally, it favors us, and occasionally, there are pitfalls in that export sales. This retail will give us a sense of stability going forward, so in three years’ time, we are planning about 500 outlets, and we are keeping this target as reasonable and modest. We don’t want to go overboard.

In five years’ time, about 1,000. That is where the expansion is supposed to reach a very crucial tipping point where the growth rate five years down the line should be much higher. In a typical retail marketing outlet, establishing the first few hundred outlets is very difficult because you start from scratch, but then you are way ahead on the learning curve, and it becomes speedier and speedier. You will see a significant growth in terms of our retail portfolio. We are targeting that particular segment.

So how many fuel outlets do we have today?

Today, we have 200. We’re targeting 250 by this year end, 500 by three years’ time, and that is keeping it as a conservative figure.

Okay. Very nice. Thank you, sir, so much, and I wish you all the best and good luck.

Thank you, Suneet.

Moderator, MRPL: Sir, you can unmute yourself and go ahead with your question. Niti, you’re not audible if you are speaking.

Am I audible now?

Devendra Kumar, Director of Finance, MRPL: Yes.

Thanks for the opportunity. So, as you mentioned, that you are planning to expand from 200 currently to 500 and then subsequently to 1,000 retail outlets. So what kind of investment do you see over the next five years in marketing? And this is just on the retail side you are mentioning, but what about the depots and the pipeline infrastructure that you are planning to develop over, let’s say, five years?

We are already, that is, aligned with our retail outlets. The question is absolutely right. Any kind of retail expansion requires the secondary capacities to come up. And we are targeting the states which are adjoining Karnataka in the near future. And we are also targeting establishment of depots in all these locations, both on the East Coast as well as the West Coast. So Mumbai is a target, Maharashtra, Visakhapatnam, and we are looking for capacities. Kerala is target. We already have capacities. We are also looking at expansion of those capacities based on our retail uptake. And we will continue to also look at the pipelines. The latest being, we are targeting the Bangalore Airport pipeline. The tenders were already on. The final outcome is awaited. That is the Devanahalli pipeline. And as and when future opportunities come, we’ll continue to look at those.

Sir, what kind of investment in marketing you envisage over, let’s say, a couple of years or three years down the line?

These kinds of infrastructure will depend on the licensing because the retail outlets do take certain time. So I’ll not give a time frame, but typically, the depots could be in the range of INR 50-100 crores annually, depending on the capacities. The pipeline would be in the range of 200 and odd crores. So the major plant is in Mumbai, Visakhapatnam. This will help us to take care of the entire southern India and smaller depots at other areas. So you can say it will be in the range of approximately 500 plus minus in the near future.

Okay. So my second question, what percentage of our product sales is through our own retail outlet currently?

Right now, the percentage, it is not going to be very significant because we are in that expansion phase. We have still not captured the kind of market. It is a very small fraction of the total volumes, total revenues. It is approximately 2%, 1.5%, I believe. Let me just.

Okay. So yeah, and once you achieve that 1,000 retail outlets in your own retail outlet, so what kind of a revenue expect from your own marketing business, marketing sales?

As I had mentioned earlier, we are targeting retail as a major revenue earner in the future. The reason is that 1,000 is only an intermediate target. In the future, we want this refinery to be a full-fledged refinery and marketing business, not just limited to only refining. So right now, we are keeping that 1,000 as an intermediate target, about five-year target, because we do have certain challenges when you are entering the market for the first time in many of the states. So that is a critical inflection point we expect. After that, we should be targeting higher numbers based on the experience. So it is targeting retail outlets as well as the depots. That is the support. We’re also opening offices like Chennai office is a major office. We also intend to have more marketing offices in the Upper Karnataka region, Andhra region, Telangana, and Mumbai region.

So these are our medium-term targets.

Yeah, sir, and just the last question from my side before I join the question queue. So what about this? You are talking about the retail outlets, and I mean, you mean the petrol and diesel, but what about the other products marketing? What are your plans? Because there will be some pressure for the other products as well with the other oil marketing companies that are expanding their crude throughput or refining expansion. So what are your plans for the other products?

See, the next, apart from MS and diesel, is the ATF. ATF, where we are very well placed. And technically, as I mentioned, we would be one of the first to be compliant with that CORSIA standard. And based on our tie-up with Shell, that is the affiliate company, we expect this particular business to keep growing. And we expect this market share to be completely with us. We do not see any dent in our ATF holdings going forward.

Okay, okay. Thanks. Thanks a lot, sir. Thanks. And all the best.

Thank you, Nilesh.

Moderator, MRPL: Thank you, Nilesh. Kaushal, you can go ahead with your question.

Yeah. Thank you for the opportunity once again, sir. Am I audible?

Devendra Kumar, Director of Finance, MRPL: Yes, Counsel.

Sir, I just wanted to understand. We have a 15 MMTPA plant. What would be the replacement cost for a plant like this? If we were supposed to set up this plant from scratch, if someone was to set up from scratch, what is the Capex required for maybe 1 MMTPA? Can you just put some light on that?

See, typically, there are certain term rules, and it varies from location to location and also on the complexity of what you are planning ultimately. So if you take the latest Barmer as, say, the latest edition, it is almost like INR 8,000 crore per MMT. It could be higher if you are planning a more complex sourcing and more complex processing, but INR 8,000 crore per million ton. That is like a benchmark.

So depending on the complexity that we have currently for that, also it’s 8,000 crores per MMT?

No, it will, of course, increase because you are not just refining crude for your primary products, but then there are other intermediate plants which have to be put up for the petchem. That will take it to higher than 10,000 also.

Okay, so seven to 10,000 is a reasonable point of view, sir, as to the replacement cost.

Yes, yes, yes. That is right.

Sir, why were the cracks? Why did the cracks suddenly shoot up in quarter three? What was the reason? Was there some global reason or anything that you look back you could pin to?

You follow the market more than us. You know the reason. We have a lot of uncertainties prevailing in the market, sourcing, commercial, and these sanctions. So these are playing a very complex. I can only say that this is a complex phase. It’s yet to stabilize, and this complexity is not going away immediately. So as it was mentioned in the very first question, that end of January, what are going to be the implications of the sanctions? Who are all compliant? That will also come into it. So we are also waiting and watching and aligning ourselves to the evolving market.

Sir, if we want to have a management meet, how do we get in touch with you?

You are welcome to Mangalore anytime, and all of you, you are welcome to Mangalore. You can also see a refinery. I’m sure it is going to impress you.

So how can we get in touch? Who’s the concerned person who we can get in touch? Any email address?

Arvind Gupta is our guy. You can get in touch with me anytime whenever you want to visit. We can plan that.

Sir, can I have your email address, please?

This is Arvind Gupta.

A-V-I-N?

[email protected].

Thank you, sir. Thank you very much for your patience.

Thank you, Kaushal.

Moderator, MRPL: Thanks, Kaushal. Dhaval, you can unmute yourself and go ahead with your question.

Yeah. So basically, now that the Russian crude is no longer a part of the slate, can you provide a broader percentages? I understand the Middle East is a majority. But still, if you can give us whether it’s where exactly the crude is being sourced in terms of the percentage, a broader percentage, if you can provide some guidance on that.

Devendra Kumar, Director of Finance, MRPL: See, about 40% of our crude, we have collectively, together with the Government of India, we are committed to Middle East crude led by Saudi Aramco, so that gives us a very stable kind of sourcing, whatever may be the geopolitical conditions, and we would continue with that. Apart from that, we have the tender process, and the tender process is aligned more to the because we do have a complex refinery, and our product mix will decide the kind of crudes which are required. Sometimes we require very sweet and light crude, sometimes something which is heavier, and it is a combination of it could be from the Middle East also, but it could be from the domestic producers from ONGC, both East Coast and West Coast, as well as Mangalore crude, and we also have this arrangement of that is one-to-one sourcing, and those arrangements or MOUs are in place.

In some of the cases, like with TOTSA or ADNOC, those can always be relied upon in the near future.

Okay. So can I understand? And is there a minimum percentage of high-sulfur crude that you maintain in your slate?

I didn’t get you. Minimum number of?

Minimum percentage of high-sulfur crude that could be maintained in your refinery slate? I understand there will be different products and different requirements. But is there a benchmark that we can keep like the high-sulfur crude that you would have in your refinery?

High sulfur, we don’t target high sulfur. We target based on other components. If it turns out to be high sulfur, it is not a no-go for us. It’s not a deal breaker because we have a sulfur treatment facility in our refinery. For us, it’s not an issue.

So let’s say, if I have to gauge how much percentage of heavier crudes do you particularly use, or is there a minimum benchmark that you have for heavier crudes?

Yeah. Even the same. So see, as you already know, our refinery is a complex refinery. We can even process heavy crudes such as Merey or Maya, apart from whatever we are processing currently. But we can go up to 16-15 API also. This is the capability the refinery has. But it really depends on the economics at that particular day when we are purchasing the crude, that what crude we are going toward. Our refinery is obviously biased towards heavier crude because that is economically more suiting us because of the complex nature of the refinery. But I cannot tell a thumb rule percentage that this much only or around a set percentage we are processing only heavier crude and not the lighter crude.

It really depends on the opportunity that we are getting and the complexity and the economics that the product will bring us to that degree. Jawhal, I’ll put the same thing in simpler terms. See, a more complex refinery, heavier crudes can be processed more easily.

No, no. I understand. Yeah. I understand, sir.

If we don’t get the heavier crudes at a cheaper rate, we would not go for heavier crudes. That is the simple commercial reason for it. What is it? I saw it. You said that. Currently, for the nine months, I can mention that it is around 70%-72%, the heavier crude.

Oh, okay. Understood. That is helpful. Thank you.

Yeah.

Moderator, MRPL: Thanks, Jawhal. Sir, we have two questions in the chat box. I will read that, and please try to answer that one. So the first question is asking that the throughput that we have declared in our press release is 4.7 million metric tons, whereas PPSC is mentioning 4.561 million tons. Any reason for the discrepancy in the two?

Devendra Kumar, Director of Finance, MRPL: See, what we have published is what I have immediately. Regarding the PPAC numbers, I have to. I can only get back to you. I’ll not be able to comment immediately because I don’t have that with me immediately. You said it is 4.56. I hope there’s no confusion between production numbers and throughput numbers. We’ll get back to you. I’ll.

Moderator, MRPL: 4.56.

Devendra Kumar, Director of Finance, MRPL: You have the number.

Moderator, MRPL: Yes. And the last thing.

Devendra Kumar, Director of Finance, MRPL: You can say that. One second. So the thing is, as in the same, the 4.56 that you mentioned was the gross crude percentage, and the 4.7 million metric ton, and the 4.7 that we reported in our financials, that was the net crude percentage. So our revenue and the rest of the things and the bottom line is driven by the net crude. That is why we focus on net crude and not the gross crude.

Moderator, MRPL: Sure, sir. The second question is, is MRPL looking to buy crude oil for processing?

Devendra Kumar, Director of Finance, MRPL: Yes. So we are actively looking at it. We have not decided, but we are looking at it. It depends on the commercial terms because freights are expected to be on the higher side when the rate is also that is low API crude. So we will look at the total terms and conditions and the commercial.

Moderator, MRPL: Sure, sir. And the last question is, if you can highlight what Capex you in the quarter three?

Devendra Kumar, Director of Finance, MRPL: So we have committed earlier also in Q2 that the overall CapEx on an annual basis is in the range of about INR 1,500 crores. That is the kind of CapEx we target as it’s a mix of revamping as well as small-time that is some capacities which we keep adding. It’s not a capacity addition of total this, but intermediate products like IBB was one such product or grid infrastructure. There are some other minor projects also, some pipeline that is you change. Yeah. Rerouting, yes.

Moderator, MRPL: Sure, sir. Sir, one last question from Mike. So we have also announced this ISO between the pilot that we said that we’ll do in the next year. So before we take our question, I think Sarthak also has a question. Sarthak, if you can unmute yourself and go ahead with your question.

Yeah. Hi. Morning. Am I audible?

Devendra Kumar, Director of Finance, MRPL: Yes, Sarthak, please.

Yeah. Hi, sir. Thank you for answering all the questions. I just had one follow-up question on the CapEx part. So you mentioned that INR 1,500 crores that we are planning to do in FY26. If you could just help as to how much we have incurred till December and also your guidance on FY27 basis because I believe there should be some tapering off in CapEx if at all we include the IBB part. And also, how do we see the return metrics and the project of isobutyl benzene that is coming up and how it will add to the profitability part? And lastly, sorry for the elaborate question. Lastly, how should we see as the dividend payout policy for this year and next year as well, considering we are going to do good numbers in Q4 as well, similar like Q2 numbers?

So a bit of clarity on this will help. Yeah. Thank you.

I’ll answer the last question first on the dividend part. The dividend per se is not out of discussion. It has to be seen in the context of the three requirements. One is our own Capex requirement. Second is the kind of debt which we carry. And the third is, of course, the dividend. So compared to last year’s annual profitability, these three quarters have been relatively good. And we did push some of our ongoing Capex to this year. Those should get completed. And if Q4 remains profitable, that we might, that is not me personally, the board might actually look at dividend also. So that I will leave to the decision of the board. But that is definitely on the annual that looking at the overall fourth quarter, there could be a dividend possibility. Now, coming to the first question. First question was.

Moderator, MRPL: In December.

Devendra Kumar, Director of Finance, MRPL: The Capex was INR 887 crores. That is for three quarters. And some of these projects should be coming to a major technical closure by end of March. So this could go up to about INR 1,500 crores.

Got it, sir, and any clarity on next year’s Capex numbers for FY27?

It will be in the similar range because revamping is something which keeps happening constantly. You need to maintain the plant in best of working conditions. As you can see, the plant is but for the shutdown, first quarter shutdown, we would have continued to have throughput of almost 18 MMT. So it is almost 120% above the nameplate capacity. And to keep the plant running at the top performance, you need to continuously keep looking at your equipment. And whatever requires revamping has to be attended to. So we do have some ongoing projects, plus some are opportunity projects, like I said, the rerouting of pipelines. So the target remains in that ballpark of INR 1,500 crores.

Sure, sir. Thank you. And just very lastly, any debt numbers that we are looking at, considering that we have a commendable achievement to push the debt below INR 10,000 crores as of now? So how should we look at the debt numbers moving in this year and as well as 2027?

You have seen our balance sheet. We have NCDs on our books. Those NCDs are not due till 2028. Whatever has been paid in December, after that, the next due date is 2028. It’s almost INR 4,500 crores locked till 2028. The next big item is the ECBs. ECB is right now. There’s some volatility. But otherwise, the ECB gives us a certain cushion. We are actively evaluating that. It’s a trade-off between debt reduction because if I have to pay off that ECB right now, you do incur. There is a foreign exchange loss. We do expect the forex market to move if the US trade deal comes through. We’ll take a call accordingly. Right now, it is 93, and it could come down not very significantly, but it might come down if the market remains favorable.

Okay. Got it. This was very helpful. Yeah. Thank you so much, and congratulations to the team.

Thank you.

Moderator, MRPL: Sumit, you can unmute yourself and go ahead with your question. Sumit, you can mute yourself ahead. I think there’s no response on his answer. So is there one more question in the.

Can you hear me now?

Yeah, yeah, Sumit. Yeah, we hear you now. Go ahead.

Sorry, sorry. I mean, sorry about that. So sir, now coming back to your point on fuel marketing since you’re looking at a 5X kind of growth over the next five years. So sir, if I recall this correctly, when Reliance and BP had done a deal, the valuation which they took was basically at about INR 10 crores per fuel outlet. So can you basically concur with the same that the cost to set up one fuel outlet should be something like at least about INR 5-6 crores? I mean, the pure reason I ask this is, sir, today in the listed domain, we’ve got our parent as well as oil marketing companies which are trading at subpar valuation.

Can you just help understand on one side? We see the reality is that there is a substantial amount of growth in the market that not only you, but all the companies are adding retail outlets. And you’re kind of clearly seeing from Mr. Hardeep Singh Puri also talking about making India a refining hub of about 303. But to the other side, you have the stock markets which don’t value these companies. So can you help understand the discrepancy between the two? And the valuation of fuel marketing would really help a lot.

Devendra Kumar, Director of Finance, MRPL: That’s a very interesting question, and I would love to answer that. So thanks for the question. So first things first, the retail outlet, the cost is significantly different depending on the location. So if it is an urban location, you are right, it could be much higher. But all the newer outlets which are coming up, so we have a mix of outlets coming up. We are also bound by certain guidelines of the Ministry government guidelines. So it cannot be only urban or only in the cities or only on the highways. There is a mix and match. So the outlets, and we also have that is plain vanilla kind of outlets and slightly smarter outlets.

The cost would vary from as low as about 1.5 crores for a smaller outlet to something what you have mentioned, and that will be for a bigger city kind of environment. For us also, it is a very similar mix and match. Right now, going forward, we have advertised depending on the responses, on an average, it is coming out to be in that range of two crores. That is the current. But whether it will continue to be in that same range going forward, I cannot comment on that. It will depend on the market response.

Understood. And sir, I mean, just one question. I mean, to the earlier participant, you said that the cost to set up one MMT of refining is about 7,000 crores, if I heard correctly. So today, for example, you have about 15 MMT, okay, and your throughput, as you mentioned, is about 18. Okay. But you clearly see your market cap is only 25,000 crores. So the point I’m trying to make is that what steps are you guys taking to increase market capitalization? Because these companies need to start trading at a much higher P multiple than what they trade today. So can you share some thoughts on that as well?

Sumit, you have asked a question which we also ask yourself. But yes, depending on the feedback, this is a common troubling point for all the OMCs. It’s not just us. It is all the OMCs, PSU OMCs, that the valuation is much below you rightly pointed out that. And one very crucial fact is that almost the entirety of the pricing and the taxation is still considered controlled by the government despite all the deregulations happening in this space. I’m referring to your fraternity. We keep getting that feedback. And one is like we had the SAED, although it is no longer there. You never know if in a crisis, you might again come up with some other kind of tax. That is the kind of feedback which we have got. In case of MRPL, one peculiarity is that our float is very limited.

Almost 88% is with ONGC MRPL, and only balance 12% approximately is in the open market. Even in that 12%, about 1% would be locked up for those non-participants. So the float is also an issue, and we are examining it together with our parent companies to address that float issue.

Sure, sir. Thank you so much. And I’ll probably connect with you offline. Thanks a lot, sir.

Thank you, Sumit.

Moderator, MRPL: Thank you, Sumit. Sir, we have a couple of more questions on the chat box. What is the initiative to reduce the crude sourcing cost?

Finance Team Member, MRPL: What is the initiative to reduce crude sourcing cost?

Devendra Kumar, Director of Finance, MRPL: Sorry, I didn’t get the question correctly. Is it referring to the freight or overall?

Moderator, MRPL: So it would be overall, sir. So I think whatever we are doing in terms of reducing the total cost of purchase as far as the crude basket is concerned, be it freight or maybe be it, say, sourcing change in terms of long-term, short-term, or taking benefit of arbitrage crude or sea freight as well.

Devendra Kumar, Director of Finance, MRPL: Okay. Thanks for this clarification. See, like any other refiner, we are also marked to market. We are not in a league to be actually dictating any of these things like OPEC or any other large company. Our margins are derived not from the absolute rate. It is derived from the cracks. And that is where we make our major earnings from. And this is where we keep targeting. That is a mix of export, a mix of domestic term sales. And now we are also targeting the retail outlets. That is where the margins for the company are. It is not just the sourcing. It is the margins which are important to us.

Moderator, MRPL: Okay. Another question is on our retail throughput outlet. What volumes are we doing for outlet per month?

Finance Team Member, MRPL: I’ll come back on the retail outlet volume part. You may proceed with the next question. I’ll clarify in a minute.

Devendra Kumar, Director of Finance, MRPL: Correct the number. NCD number, what is that number?

Finance Team Member, MRPL: Yeah.

Devendra Kumar, Director of Finance, MRPL: 3,000?

Finance Team Member, MRPL: The NCD that was asked, the number is INR 3,260 crores that we are having. Right now, this is the balance amount, 3,260. And ECB amount is $500 million. That comes to around INR 4,500 crores.

Moderator, MRPL: Sure, sir. So next year, we have also guided around INR 1,500 crores of CapEx. Is there a breakdown of the same thing in terms of what is the maintenance CapEx and what will be going into IBB or anything like that?

Devendra Kumar, Director of Finance, MRPL: I’ll request my team. They’ll give you the breakdown shortly. We can go take the next question.

Moderator, MRPL: Question is, how much % of refined products are we exporting currently?

Devendra Kumar, Director of Finance, MRPL: We export almost 40% of our products in exports right now. That is the percentage. It may change quarter on quarter, but I’m giving you the figure from on a running basis last year.

Finance Team Member, MRPL: Additionally, the retail outlet sale is around 120 KL per month per outlet.

Moderator, MRPL: Thank you, sir. There’s one question, one last question. That’s basically the person is asking what is our expectation on GRM considering that refining capacity is becoming constrained globally?

Devendra Kumar, Director of Finance, MRPL: GRM, if you follow the markets, it is still quite healthy. Although we did say that it is going closer to Q2. In fact, it’s not as high as Q3, but it is still quite healthy, and it suits us fine because very high GRMs, we know the market will not be able to sustain the kind of GRMs which we saw in Q3. We did have spikes beyond that 21 also.

Moderator, MRPL: Sure, sir. That’s all from the chat box also, sir. If you have the CapEx breakdown, we can take that, and otherwise, we will just do that.

Devendra Kumar, Director of Finance, MRPL: CapEx breakdown you have? Just give us half a minute. Yes.

Finance Team Member, MRPL: In INR 1,500 crores, around INR 400-INR 450 crores will be towards the growth part of it. Retail outlets and other projects or grid power import and all those things. The rest you can take majorly towards maintenance.

Devendra Kumar, Director of Finance, MRPL: Revamping. That is what we call.

Moderator, MRPL: Sure, sir. Just one last question. What is the IRR we are expecting from IBB? If you could share some financials in terms of Sugitel project that we are doing, what the CapEx is required capacity and all that stuff.

Devendra Kumar, Director of Finance, MRPL: Regarding IBB, we are still, yeah, it’s a pilot project, and we are still quite a few years from its commercialization, so we need to go across many decision gates. First is the technical, that is the inspection of that. It has to meet the stringent quality norms, and we are quite hopeful of that. After that, to get the licenses for the first, we still see about three, four years down the line, and only after that, we’ll be in a position to take a realistic view on the IRR. It also depends on the market conditions at that point in time, so right now, taking a call on IRR is a little too early to comment on that.

Moderator, MRPL: Okay, sir. So that was the last question, sir. On behalf of PL Capital, we would like to thank all the participants for the valuable time. We’d also like to thank the management on sharing their details. Thank you very much, sir. Have a nice day.

Devendra Kumar, Director of Finance, MRPL: I would like to thank each one of you who has shown interest in the company and taking time out. I would like to re-emphasize, each one of you is invited to visit our plant, and we are available to meet once again in person also. Thanks for your time, and if there are any questions which remain ambiguous or unanswered, please feel free to contact my investor, sir. Arvind Gupta is the person, and we’ll be happy to respond to you once again. Thank you.

Moderator, MRPL: Thank you. Thank you.