Chennai Petroleum Corporation Limited (CHENNPETRO) Q4 FY23 Earnings Concall Transcript

Chennai Petroleum Corporation Limited (NSE:CHENNPETRO) Q4 FY23 Earnings Concall dated Apr. 28, 2023.

Corporate Participants:

Rohit Kumar Agarwala — Director, Finance

Analysts:

Harshraj Aggarwal — Anand Rathi Shares and Stock Brokers Ltd. — Analyst

Maheshwari — Morgan Stanley — Analyst

Hardik Solanki — ICICI Securities — Analyst

Pritesh Chheda — Lucky Investment Managers — Analyst

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

Hetal Gada — Max Life Insurance — Analyst

Sabri Hazarika — Emkay Global Financial Services Ltd — Analyst

Guneet Bhasin — Celestial Capital — Analyst

Kirtan Mehta — BOB Capital Markets — Analyst

Sumit Pokharna — Kotak Securities — Analyst

Kaushal Kedia — Wall for PMS — Analyst

Harsh Maru — MK Global — Analyst

Nalin Shah — NVS Brokerage — Analyst

NM Modi — — Analyst

Aman Jain — Augmenta Research — Analyst

Unidentified Participant — — Analyst

Tyaga Khaitan — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Chennai Petroleum Corporation Q4 and FY23 Earnings Conference Call, hosted by Anand Rathi Shares and Stock Brokers. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harshraj Aggarwal. Thank you and over to you.

Harshraj Aggarwal — Anand Rathi Shares and Stock Brokers Ltd. — Analyst

Thank you, Ryan. Good afternoon, everyone. It is my pleasure to welcome you all participants for this Q4 and FY23 Conference Call of Chennai Petroleum Corporation. We have with us the senior management represented by Shri. Rohit Kumar Agarwala, Director Finance; Shri. Venkateswaran, Chief General Manager, Finance; Shri. Anil Sahni, General Manager, Corporate Planning; Shri. V. Srikanth, General Manager, production planning and his team. Without much delay, I would like to pass on the floor to the management, so that they can give the opening remarks and then we can move on to question-and-answer session. Over to you, Sir.

Rohit Kumar Agarwala — Director, Finance

Thank you, Harsh. Good afternoon, ladies and gentlemen. I am Rohit Agarwala, Director Finance, Chennai Petroleum Corporation Limited. Our results for Q4 and the full financial year ’22 ’23, are with you and now this — sometimes since — I hope you you would have gone through them and any specific queries on them lastly, we will take half an hour briefing.

Let me start with some of the highlights. CPCL achieved the highest ever throughput, that is of 11.3 MMTPA during financial year 2022 and ’23. This reflects our flexibility to scale to new high bidding robust margin by allocating the most opportunities that is available. It may also be noted during this year, we could process 1.4 MMTA of Russian crude, which is equivalent to 13% of our capacity. CPCL achieved the best ever fuel loss 9.06% best MBN figure of 74.2, best EII of 89.2 against previous debt.

CPCL achieved the highest-ever annual production and dispatch of product including value-added products like hexane MTO niche products like metobrate [Phonetic] diesel was also produced during the year. On the front of energy efficiency, CPCL contributed significant part of our profit in the year gone by and we are committed to much more new scheme in that space so as to reduce loss and increase the yield. Some of the statistics to the year gone by ’22, ’23 are as under. Crude throughput was 11316 TMT [Phonetic] as against 9040 in the previous year. Capacity utilization was 108% vis-a-vis 86% in the previous year. Fuel loss was 9.06% vis-a-vis 9.70% in the previous year. Distillate yield improved to 76% as against 74.9% previously. High sulphur was 66% as against 62%, but again on high sulphur, it is not always to maximize high sulphur. We look at the opportunity what is available, what is the difference between high sulfur and low sulfur depending on we take a decision to maximize margin.

As far as outlook remains, all of you know that the GRMs, the size part is the market phase depending on what margins are available there. But certainly, we are committed to bring on-board value-added product, energy efficiency and flexibility, which is a USP of CPCL so that we can take maximum advantage of the opportunities that is on table and hopefully focus will also be there to optimize operating costs and keep our debt within a reasonable level limit. So I’m happy to take any queries from your side. Harsh?

Questions and Answers:

Operator

Thank you. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] Participants are requested to use handsets while asking a question. Ladies and gentlemen we will wait for a moment while the question queue assembles. Our first question is from the line of Maheshwari from Morgan Stanley. Please go ahead.

Maheshwari — Morgan Stanley — Analyst

Yeah, hi sir, thank you for the call. Just two questions from my end. Firstly, you talked about your positioning 13% Russian crude for the fiscal ’23. Can you just give us an idea broadly for the 4th quarter, what was that number and how much more can CPCL really take in terms of fresh in terms and the advantage you you’re getting on back of that.

Rohit Kumar Agarwala — Director, Finance

Yeah, so in quarter 4, we process about 22%. So you’ve got it, Mr. Maheshwari. Quarter 4 figure was 22% Russian crude. And at this level, we would have in that range, our capacity will be 22% to 25% in that range depending on operating conditions. That will be our capacity.

Maheshwari — Morgan Stanley — Analyst

Got it. And sir, what was the advantage in GRM you were able to get on back of that.

Rohit Kumar Agarwala — Director, Finance

It cannot be given in a precise number, because you know all the parcels of crude are not at equivalent prices because these are opportunity crude. It all depends at what price we purchase. So every Russian crude parcel or not at a given discount. They range between $4 to $5.7 to $7 to $8 depending on what time we are purchasing and what is available in the market.

Maheshwari — Morgan Stanley — Analyst

Got it, sir. So the second question was more related to the focus that you said on the operating cost side and energy saving, etc. So can you just give us an idea of what was your opex per barrel for fiscal ’23 and how much more can you lower that.

Rohit Kumar Agarwala — Director, Finance

Opex for the current year was $1.7 per barrel.

Maheshwari — Morgan Stanley — Analyst

And how much can you lower it there roughly.

Rohit Kumar Agarwala — Director, Finance

We have to consider. This time already, we had around 2 million of extra production. So already this is the high divisor. So unless significant improvement happens over a period, the possibilities are marginal, but yes. And other factors can come to bring it down. But yes, this is based on a high divisor already.

Maheshwari — Morgan Stanley — Analyst

So sustaining this even if utilization rates will kind of normalize it bit down, that should be still possible. This is what you’re saying.

Rohit Kumar Agarwala — Director, Finance

Yes, yes. So what I’m saying is it is already a divisor. So this is already a good number but yes through other measures, this can possibly improvise.

Maheshwari — Morgan Stanley — Analyst

Sure, thank you.

Operator

Thank you. Our next question comes from the line of Hardik Solanki from ICICI Securities. Please go ahead.

Hardik Solanki — ICICI Securities — Analyst

Am I audible, sir?

Harshraj Aggarwal — Anand Rathi Shares and Stock Brokers Ltd. — Analyst

Yeah, please.

Hardik Solanki — ICICI Securities — Analyst

What is the windfall tax impact for the quarter and for the full year [Technical Issues]

Rohit Kumar Agarwala — Director, Finance

If I heard you right, are you asking about the windfall tax impact

Hardik Solanki — ICICI Securities — Analyst

Yes, exactly.

Rohit Kumar Agarwala — Director, Finance

And for the last quarter you are asking?

Hardik Solanki — ICICI Securities — Analyst

Last quarter, full year and also in terms of momentum.

Rohit Kumar Agarwala — Director, Finance

So last quarter, the windfall tax impact was 700 crores. Full year, it would be in the range of 4,000 plus, approx 4,000 crores on a gross basis.

Hardik Solanki — ICICI Securities — Analyst

Okay. Okay. And did I — I think [Technical Issues] are you likely to [Technical Issues]

Rohit Kumar Agarwala — Director, Finance

I think MRPL has reported the numbers today and some figures may not be publicly available. I think I’ll advise my team, you can get in touch with them after a day or two. I think they can, they can do a comparison. I think now this comparison may not be feasible.

Hardik Solanki — ICICI Securities — Analyst

Sure, sure. Okay, thanks.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yes, sir. I wanted to know the greenfield, you know, refinery capex cost per million ton if land was allotted or land was available.

Rohit Kumar Agarwala — Director, Finance

I can tell you about our one only. CPCL and the parent company ICL is entered into a JV to put up a 9 million tons of refinery at Nagapattinam and for that 9 million, the last estimate was 31,500 approximate cost with plus minus 10% accuracy.

Pritesh Chheda — Lucky Investment Managers — Analyst

So how different is it from our existing refinery?

Rohit Kumar Agarwala — Director, Finance

This refinery is a pretty old refinery, and that’s a new refinery that is coming up. So this 31,500 is a, you know, fresh cost, is a new newly built now cost. And earlier one is a old refinery. It has come in multiple phases, so that is one. This will be a single column refinery. Second there maybe 5% petrochemical integration will be there, in the proposed refinery.

Pritesh Chheda — Lucky Investment Managers — Analyst

So if this — will this 5% petrochemical integration change the dynamic significantly of the capex part?

Rohit Kumar Agarwala — Director, Finance

I don’t suppose so, because configuration can happen with higher integration as well.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay, thank you very much. Does this 31,500 include any lopsided land cost?

Rohit Kumar Agarwala — Director, Finance

It includes some land because existing land was not sufficient. So additional land cost is include additional land cost

Pritesh Chheda — Lucky Investment Managers — Analyst

That should be a significant number by any chance.

Rohit Kumar Agarwala — Director, Finance

Three to 500 crores.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Thank you very much.

Operator

Thank you. Our next question comes from the line of Varatharajan Sivasankaran from Antique Broking Limited. Please go ahead.

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

Thanks for the opportunity. Sir, if earlier you look at the fuel loss can I assume that instead of gas in the refinery that has gone to zero or [Indecipherable]

Rohit Kumar Agarwala — Director, Finance

Presently, we are using 1 million [Indecipherable]

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

At the peak, what would be your number?

Rohit Kumar Agarwala — Director, Finance

See, rather than peak, let me tell you what is the possibility we have. We can, you know, increase this by another 50% to 60% depending on season prices.

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

So if gas price is ready to fall, you might be in a position to use.

Rohit Kumar Agarwala — Director, Finance

Yes. Yes. If present falling prices continues and it comes within our economic range, then we can pick up by another 50% to 60% intake more.

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

So you are saying currently can go up to 1.5?

Rohit Kumar Agarwala — Director, Finance

Yeah. 1.5, 1.6.

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

Very nice. Any update on the new refinery —

Rohit Kumar Agarwala — Director, Finance

It was not clear. Can you repeat?

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

Yeah. New refinery proposal. What is the current stage it is in?

Rohit Kumar Agarwala — Director, Finance

Yes, yes. So, almost 30, 40% of the additional land has been required. We hope to complete the balance land acquisition maybe in the next quarter or so. These are at advanced stage with the government. The new JV has already been formed. We will run the process of financial closure and already more than 2000 crores orders have been placed, you know, and another significant amount are already open and are being evaluated. So it should be in due course. It should take, you know, it should proceed in a normal pace.

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

Sure. in closing one more question. What is your capital commitment in the form of equity and any big commitment as well?

Rohit Kumar Agarwala — Director, Finance

So you’d be knowing that this new proposal is coming with CCPL being 25% of equity and IOC 25% balance, 50% coming from private investors. So, the equity cost equivalent of IOC and CPCL is 2570 at this point of time. So 2570 CPCL, 2570 IOC equivalent amount coming through CCD and then balance coming through debt.

Varatharajan Sivasankaran — Antique Broking Limited — Analyst

Okay, sir. Thank you.

Operator

Thank you. Our next question comes on the line of Hetal Gada from Max Life Insurance, please go ahead.

Hetal Gada — Max Life Insurance — Analyst

Hi sir. Good afternoon. Sir, I just wanted to understand like from next year onwards like as we generate cash, how, what are the capex, one is going towards the Cauvery basin project. On standalone plan sir, what kind of capex plans are we planning?

Rohit Kumar Agarwala — Director, Finance

Yeah, see, on a normal case, our maintenance capex would be around 200 crores to 300 crores per annum for CPCL. On the Cauvery refinery front, the only contribution from CPCL now would be equity contribution, which is capped at 2,570. If you see our disclosures already about 800 crores to 900 crores have been spent. That is the equity of gross equity. The balance will flow as per expenditure and we hope, at least it’ll take more than two financial years for that contribution.

Hetal Gada — Max Life Insurance — Analyst

Sir, I’m so sorry, but I really could not hear you.

Rohit Kumar Agarwala — Director, Finance

Okay, let me repeat and whether — tell me whether it’s suffices your requirements.

Hetal Gada — Max Life Insurance — Analyst

Yeah, sure.

Rohit Kumar Agarwala — Director, Finance

Regarding capex maintenance capex is in the range of 200 crores to 300 crores. Normal capex 200 crores to 300 crores. CBR, Cauvery Basin there will be no capex from CPCL. Only there will be equity contribution. Equity currently is capped at 2,570, out of which 800 crores, 900 crores already spent. No cash flow will happen further. That will get adjusted. The balance amount will flow in more than two years.

Hetal Gada — Max Life Insurance — Analyst

Okay. So more than two years, it’ll be spread over the next two to three years? Is my understanding correct?

Rohit Kumar Agarwala — Director, Finance

Yes. Yes.

Hetal Gada — Max Life Insurance — Analyst

And we are not planning for any upgradation of any other project on the standalone CPCL?

Rohit Kumar Agarwala — Director, Finance

200 crores to 300 crores are normal upgradation maintenance capex. Major project alone we have not approved at this point of time, as in when we want, it’ll be based on economics.

Hetal Gada — Max Life Insurance — Analyst

Sir, if I may, what is the line or where you are, I mean, what kind of projects are you looking for? Are you planning to increase capacity or any forward integration projects? Do you understand?

Rohit Kumar Agarwala — Director, Finance

Yes, at this point of time, you know, looking for capacity at the crude level may not be, is not there on the anvil, you know, but there will be evaluated product, either in the petrochemical evaluation or on the lubricant side. Those we always evaluate on a regular basis. And whenever, depending on market demand and profitability, we select them and we’ll pick them up. The few could be LOBS two, three types, propoline, you know, these are something green hexane, food grade hexane expansion, you know, these are items which is there on our radar.

Hetal Gada — Max Life Insurance — Analyst

Okay sir. Okay. And that will be inclusive in that 200 crores, 300 cross that you are pending over and above the maintenance capex?

Rohit Kumar Agarwala — Director, Finance

Yes. The small fitment will be there except LOBS. If at all it happens, that will remain capex. But as of now, nothing has been approved or nothing has been finalized.

Hetal Gada — Max Life Insurance — Analyst

Okay. Sir, on your debt front, we ended the year at 4,200 approximately cash debt with the cash flowed generated, I mean, I want to understand is how much is our working capital requirement that we need for our entire capacity, and will we be focusing on deleveraging further in the next year?

Rohit Kumar Agarwala — Director, Finance

I understand the working capital is 3,800 crores. You know, around that time. So 3,500 to 4,000 is maxed our working capital at the present price level. And with cash flows happening, you know, our capex will met to our internal resources.

Hetal Gada — Max Life Insurance — Analyst

No, I meant whether you’ll be focusing on other deleveraging of balance sheet. So like if you mentioned our working capital is close to 3500 crores, so would we be focus — I mean, would we use the cash flow towards furthering deleveraging of balance sheet from here onwards?

Rohit Kumar Agarwala — Director, Finance

So it depends. As I said, suppose I’m getting a good project of LOBS, instead of retaining debt, I may take up a, you know, significant project to increase my evaluated product. So it all depends on what kind of projects I have. What is the margins available vis-a-vis my cash flow. You know, depending on the options, I may like to reduce my working capital or I may like to invest in a significant project and try to improvise my margin for future years.

Hetal Gada — Max Life Insurance — Analyst

Okay. And lastly, on if you can and you know, just any comments on capital policy allocation policy, like dividends and all like, so this payout be consistent like next year onwards or it will be of the fixed amount of payout as dividends?

Rohit Kumar Agarwala — Director, Finance

If you see in the past also, see, you all know that refinery businesses is impacted with high volatility. But in the past also, wherever, you know, there have been margins and profits, CPCL has always rewarded the minority shareholders. So I think on a capital allocation policy that is there. But yes, we do a judicious decision after taking into account our internal fund deployment, you know, possibilities because finally even for the minority shareholders, the returns can be earned more out of retention, that is in their interest. So looking into these two assets we will always balance. Wherever there are cash, you know, a part will be distributed to those shareholders. And wherever there are, you know, high yielding projects we will deploy back money in those opportunities as well.

Hetal Gada — Max Life Insurance — Analyst

Okay, sir. Thank you so much.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Sabri Hazarika – Emkay Global. Please go ahead.

Sabri Hazarika — Emkay Global Financial Services Ltd — Analyst

Yeah, good afternoon, Sir. What is the inventory loss in Q4 and for full year FY23?

Rohit Kumar Agarwala — Director, Finance

Inventory losses in Q4 and for the full year?

Sabri Hazarika — Emkay Global Financial Services Ltd — Analyst

Yes.

Rohit Kumar Agarwala — Director, Finance

Just a moment, I will give you. Q4 it is $1 and for the full year $1. You want in rupee terms also?

Sabri Hazarika — Emkay Global Financial Services Ltd — Analyst

Yeah, please tell me.

Rohit Kumar Agarwala — Director, Finance

130 crores for the quarter and say 560 crores for the full year.

Sabri Hazarika — Emkay Global Financial Services Ltd — Analyst

560 crores and 130 crores. Okay, sir. Thank you so much. Congratulations for this number.

Rohit Kumar Agarwala — Director, Finance

Thank you. Our next question comes from the line of Guneet Bhasin from Celestial Capital. Please go ahead. Guneet Bhasin, your line is unmuted. You could please proceed with your question.

Guneet Bhasin — Celestial Capital — Analyst

Yeah, thanks for the opportunity. Am I audible?

Rohit Kumar Agarwala — Director, Finance

Yes. Yes. Very loud and clear.

Guneet Bhasin — Celestial Capital — Analyst

Okay. Sir, I wanted to know that for the JV for the new refinery, you have given a land parcel for the JV. So what amount you have got for that or participation, equity participation. What is the amount of that parcel which you have given to them?

Rohit Kumar Agarwala — Director, Finance

The way I remember perhaps, the existing land parcel was 600 acres. That is there. Besides that, another significant equivalent amount is being purchased. Another 600 acres almost is being purchased, out of which 30% order has already been acquired. And, you know, balance are in the advanced stage of acquisition, and because all this acquisition are happening through government agencies. So tell me what specific you want to know.

Guneet Bhasin — Celestial Capital — Analyst

I wanted to know, sir, that what, you must have got a price for your land. They must have fixed a price for your–

Rohit Kumar Agarwala — Director, Finance

The existing land is on a lease model.

Guneet Bhasin — Celestial Capital — Analyst

Okay. So you have not got any inflow for that or a credit for that?

Rohit Kumar Agarwala — Director, Finance

No, I have not planned a transfer as of now. Presently, I have planned a lease model.

Guneet Bhasin — Celestial Capital — Analyst

Lease model. Okay, sir. And so for Q4 of 23, how much Russian crude in million tons have been used by CPCL?

Rohit Kumar Agarwala — Director, Finance

1.4 is for the full year. Percentage wise, it was 22%, which will translate to — So let me repeat. Volume wise 1.4 million for the full year which translates to 13% of our capacity, Q4 percentage is 22%, which translates to volume wise, 0.5 million metric for Q4, volume wise.

Guneet Bhasin — Celestial Capital — Analyst

0.5 million tons and for Q1 of 2024 how much Russian crude you are planning to use for your refining?

Rohit Kumar Agarwala — Director, Finance

I think only a month has gone so the exact numbers will not be there because significant part of this is happening on a spot basis. Everything is not long term at this point of time, but again, I think that still 25%, you can assume.

Guneet Bhasin — Celestial Capital — Analyst

Around 25%.

Rohit Kumar Agarwala — Director, Finance

Yeah, 20% to 25%.

Guneet Bhasin — Celestial Capital — Analyst

Okay. And sir, what is the discount you’re getting on the Russian crude?

Rohit Kumar Agarwala — Director, Finance

As I said, because these are happening on spot, it ranges between $3, $4 to $7, $8. It depends on the deal. And there is no fixed format or fixed pricing because these are on spot basis.

Guneet Bhasin — Celestial Capital — Analyst

Thank you, sir.

Operator

Thank you. Our next question comes from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.

Kirtan Mehta — BOB Capital Markets — Analyst

Thank you, sir, for this opportunity. Just on the following of the Russian crude. If the Russian crude price goes above the price set by the European Union, would you be still be able to continue the procurement?

Rohit Kumar Agarwala — Director, Finance

See, if you ask me from a business angle, still it is cheaper than other crude and it is suiting my basket and on a net basis, I’m getting margin. I think I continue to process it assuming there are no compliance hurdle or there are no statutory non-compliances that I’m doing right.

Kirtan Mehta — BOB Capital Markets — Analyst

Great. One more question on the Greenfield refinery. For the 50% that we, where we are in private investor, at what stage we will start identifying the private investor.

Rohit Kumar Agarwala — Director, Finance

I think you would also appreciate, you know, when significant risks are over, that is the best time to get a fair value because some of these risks are not risk to us. You know, or to the holding company because there are 11 operating refinery construction, you know, refinery construction it is pretty normal to us, but that may be risk to financial investor. So once financial closure happens, the financial significant risk are over and significant, you know, price risk, you know, price opening and award risk over and sizeable construction risk are over. I think that is the time we get a fair value and with out experience, we would like to introduce financial investor or no static investor when there is a fair value to the project.

Kirtan Mehta — BOB Capital Markets — Analyst

Thank you, sir. Thank you.

Operator

Thank you. Our next question comes on the line of Falguni Dutta from Jet Age Securities. Please go ahead. Your line has been unmuted from our end. Please proceed with your question. Since there is no response, we move to our next question, which is from the line of Sumit Pokharna from Kotak Securities. Please go ahead.

Sumit Pokharna — Kotak Securities — Analyst

Thank you very much. Congratulations for very —

Rohit Kumar Agarwala — Director, Finance

Thank you.

Sumit Pokharna — Kotak Securities — Analyst

I just wanted to understand on a sustainable basis, or for FY ’24 what throughput we can assume and is there any planned maintenance for FY ’24?

Rohit Kumar Agarwala — Director, Finance

No major planned maintenance. There is something in October. There is one in October — September, October. And because, I guess, the throughput which we have achieved in FY ’24 on a sustainable basis, these numbers looked difficult, isn’t it? No, not that way. If you’re looking at 11 MMT on a year-to-year basis for the next few years, this is not difficult. But yes, you know, 0.5 here and there, depending on requirements and profitability. See, even for my throughput, I also look at my margin. At times, I compromise on throughput for my margin but yes, from a technical perspective, if you want to ask me for the next two, three years, is 11 million metric ton feasible? Yes, it is feasible.

Sumit Pokharna — Kotak Securities — Analyst

And assuming that this Russian crude, because recently Singapore refining margins have corrected drastically. So they remain volatile throughout the year. Any wild guesses that these GRMs, which we have achieved in during the full year, are these sustainable going forward?

Rohit Kumar Agarwala — Director, Finance

You also said that the Singapore GRM are fluctuating. What I can, what is sustainable is my efficiency. My flexibility, my you know, realizing opportunities. But yes, the gross cracks, I’ll be deriving from market. Only thing I can do is I can optimize my crude cost. I can look for bargain hunting but the broad gross cracks,, I’ll be deriving the market only.

Sumit Pokharna — Kotak Securities — Analyst

Got it. Got, thank you very much, Sir.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Kaushal Kedia from Wall for PMS. Please go ahead.

Kaushal Kedia — Wall for PMS — Analyst

Yeah. Hi sir. I wanted to understand what was the discount on the Russian crude that you received last year?

Rohit Kumar Agarwala — Director, Finance

Okay. I said it ranges between $3 to $4 to $7 to $8, but because most of these are on spot basis, it depends on each parcel. The opportunity that is available to us and there is no fixed rate agreed or there is no term contract as such with us.

Kaushal Kedia — Wall for PMS — Analyst

So, the discount that you received last year, you’ll continue to receive a similar discount or you have received a similar discount in this one month gone by for this financial.

Rohit Kumar Agarwala — Director, Finance

Yes, you would appreciate, had it been term contract, I could have given some, you know, some forecast, but as I said, when the last year was spot contracts and even the current year, I’m looking at spot contracts only. As in when contracts are signed, I will let you know.

Kaushal Kedia — Wall for PMS — Analyst

No, but what I’m trying to understand is for this one month, for quarter one, you received a similar discount.

Rohit Kumar Agarwala — Director, Finance

April, yes. It was in line with last year only.

Kaushal Kedia — Wall for PMS — Analyst

Okay. And, what I want to understand is what is the intent, I know it’s difficult for you to answer this question, but I’ll still ask you. What was the intent of the government to levy the windfall tax? Was it because the refineries were making abnormal profits because of Russian crude or was it because the crude price internationally had gone up to a very high level, and the government wanted to, you know, take that price benefit. So what are the intent, if you can help me understand it better?

Rohit Kumar Agarwala — Director, Finance

You are already saying it. I think, the real intent of the government, I am not the right person, you know, to answer, but professionally as you guess, my guess would also be, you know, they must be trying to balance the economic requirements of this country. That is what I suppose.

Kaushal Kedia — Wall for PMS — Analyst

No, but was it because of the margins that abnormal margins that you all were making? Or was it because the crude oil price had gone up, so it was related to that, because I’m very confused as to what is the intent of the government, and–

Rohit Kumar Agarwala — Director, Finance

That is what my view is. It can be both. The margins were not sustainable plus economic objectives need to be balanced. But again, you would appreciate I’m not the right person to answer because the person who are creating the policies will be in a position to answer to you.

Kaushal Kedia — Wall for PMS — Analyst

I agree, fair point. And what is the kind inventory that we keep right now, for many months or weeks.

Rohit Kumar Agarwala — Director, Finance

Our inventories are for 20 to 25 days free.

Kaushal Kedia — Wall for PMS — Analyst

20, 25 days. Just one request. The last concall, I think you all had done was like more than a year ago. Is it possible to do frequent concall? Because anyways, the industry is so volatile. And we as investors, you know, we think that the price, the stock should not be below book value. It is substantially below book value. So if you can make more disclosures in your investment presentations and if you can share investment presentations, it helps us because it helps, you know, to just align with the volatility of the profit numbers that you declared in the quarter. So just a request or a suggestion, as you may term it,

Rohit Kumar Agarwala — Director, Finance

I fully appreciate. My team will be in touch with you people and if some standard information in the presentation helps you, that will be there. And, trust me, our endeavor also is to regularly interact with all people and investors we have.

Kaushal Kedia — Wall for PMS — Analyst

Just one more question. What is the average cost of borrowing?

Rohit Kumar Agarwala — Director, Finance

In the range of 6 to 6.5.

Kaushal Kedia — Wall for PMS — Analyst

Six to 6.5. And sir–

Rohit Kumar Agarwala — Director, Finance

On an average short term can be 20, 30 basis, short term can be little higher, little less than 7.

Kaushal Kedia — Wall for PMS — Analyst

Okay. Thank you very much. Thank you.

Operator

Thank you. Our next question comes from the line of Harsh Maru from MK Global. Please go ahead.

Harsh Maru — MK Global — Analyst

Thank you for the opportunity, sir. My question is regarding media reports speaking of IOCL signing a term contract with Rosneft for crude. So is there some kind of benefit that would flow to CPCL through that term contract?

Rohit Kumar Agarwala — Director, Finance

Not now, you know the point we are speaking. CPCL crude are mostly flowing from spot contracts. So as of now, no term contract has been signed by CPCL or allocated. So as of now, we are only sourcing through spot contracts. Russian, with respect to Russian. IOCL, you talked about Russian crude only?

Harsh Maru — MK Global — Analyst

Yeah, yeah, yeah. That’s right. Thank you so much.

Operator

Thank you. Our next question comes from the line of Nalin Shah from NVS Brokerage. Please go ahead.

Nalin Shah — NVS Brokerage — Analyst

At the offset, I would like to congratulate the management for I think, superb numbers. Probably it could be lifetime, you know, the best performance of CPCL.

Rohit Kumar Agarwala — Director, Finance

I think you’re correct. I think, even we are feeling, you know about this, you know, higher lifetime achievement, but yes, our internal resolve is, can we make a, you know, can we make this from the operational side if based upon which we can improve.

Nalin Shah — NVS Brokerage — Analyst

Absolutely. Absolutely. So, once again, congratulations for superb numbers. My first question is that, the new refinery with IOCL which you are building for 9 million tons, what would be the percentage holding of CPCL in that?

Rohit Kumar Agarwala — Director, Finance

So the percentage holding of CPCL is 25%, IOC 25%, balance 50% balance private investor.

Nalin Shah — NVS Brokerage — Analyst

Okay. Secondly, I was just wanted to know that, you know, is there a — what is, you know, possibility or doing, you know, because, you know, if you see the balance sheet of CPCL because like as you mentioned in the, some of the questions, it’s an old refinery created, you know, over a period of time with installments. So currently, if you see, your share capital is only INR149 crores. Whereas your top line comes to almost about INR91,000 crores. So is there some kind of a thinking that, you know, to bring the capital in line with the, actual, you know, I mean to show the correct position of the company, some kind of worse issue, something can be expected.

Rohit Kumar Agarwala — Director, Finance

Anything on your mind when you talk about correct position?

Nalin Shah — NVS Brokerage — Analyst

In terms of reflecting the — what is the cost of such big company like one which is having a INR90,000 crores top line. They cannot be created with this kind of capital.

Rohit Kumar Agarwala — Director, Finance

But whatever I know and the way I perceive all these written earnings are also capital in that sense.

Nalin Shah — NVS Brokerage — Analyst

Of course. Yeah. Yeah. Of course. Network is the same thing. But still, you know, probably you may like to bring in line with the new refineries which you are building now.

Rohit Kumar Agarwala — Director, Finance

So to my understanding, the ways are like this. Suppose we have more requirement of capital, we are expanding independently. In addition to that, we may also try to bring in some additional equity.

Nalin Shah — NVS Brokerage — Analyst

Okay. Okay. So will there be some, I mean expansion exclusively in the CPCL by itself also?

Rohit Kumar Agarwala — Director, Finance

No. No. See expansion by CPCL in the existing Manali crude basis is not feasible at this point of time. On a downstream evaluation project, we evaluating some of the projects. The normal maintenance capex is not an issue, that will not matter of the normal cash flow, but there are significant major project. We may look for that quickly, depending on the size.

Nalin Shah — NVS Brokerage — Analyst

Correct. Correct. So, as you know, one of the previous distinct speaker had asked that the volatility in terms of, you know, the performance of the refineries like yours, it is very difficult to assess that what would be the quarter to quarter kind of profitability? Can you give us some idea that on a annualized basis, we can take, you know, I mean that the current year, sorry, last year performance is something to be taken as some kind of this thing, benchmark that yes, we can expect considering the crude where it is trading that we can take it, that it could be in line with the last year performance.

Rohit Kumar Agarwala — Director, Finance

Again, my reply will be in twofold. As far as the operational part goes, be it throughput, be it operational parameter like fuel loss, you can take that these levels are sustainable. We will doing best endeavor to improvise further. The pricing part, you know, neither crude has remained in a range or gross crack nor policy parameters in terms of taxation. And those are given in the market.

Nalin Shah — NVS Brokerage — Analyst

I understand.

Rohit Kumar Agarwala — Director, Finance

But people have told consistently is. they are right and this agility will take most of the market offer. They’re able to encash most of the market offers. That will continue to happen. But yes, we’ll be given by the broad spectrum of pricing that is prevalent in the market.

Nalin Shah — NVS Brokerage — Analyst

I appreciate, and my last question will be, sir, that you have come out with the dividend of 27 per share, which I think, yesterday approximately I worked out, it comes to around INR402 crores also. So just wanted to have understanding that are we having some kind of internal parameters in terms of that? How much of the profit could be distributed or something? Or it is like on a case to case you’ll be considering?

Rohit Kumar Agarwala — Director, Finance

No, no. On a broad level, we are a listed company. We have, besides promoter, we have minority shareholders also. Whenever there are cash flows, we take a judicial decision between the available projects for further enhancement of share [Phonetic] value plus rewarding the shareholder also in terms of dividend.

Nalin Shah — NVS Brokerage — Analyst

I understand.

Rohit Kumar Agarwala — Director, Finance

This is consistent. This will continue, but yet this will be dependent on two factors. First, availability of cash flow on year-to-year basis and second, investment opportunities available with the company.

Nalin Shah — NVS Brokerage — Analyst

I understand. Thank you very much, sir, and once again, let me congratulate on an excellent set of numbers.

Rohit Kumar Agarwala — Director, Finance

Thank you from my side also.

Operator

Thank you. Our next question comes from the line of NM Modi, an individual investor. Please go ahead.

NM Modi — — Analyst

Yes, sir, good afternoon. My question is regarding this in most of your account, the reason for provision to the extent of 217.06 crores for the year ended March and this was there in the last year. So sir, is it the end or it will continue.

Rohit Kumar Agarwala — Director, Finance

See whatever, you know, whatever issues we are there are fully provided for.

NM Modi — — Analyst

Okay. So, nothing–.

Rohit Kumar Agarwala — Director, Finance

Nothing is known to us, which is not so much right now but you understand, these are provision on taxation and other, which will fall year after year. So, this is based on year to year development, but yes, whatever cases are there as for the opening available, we have provided for hopefully.

NM Modi — — Analyst

So which has it incurred. Can you tell me under which–

Rohit Kumar Agarwala — Director, Finance

These are taxation related inter taxes related demands, which we evaluated and based on opinion, we provided for.

Operator

Thank you. Our next question comes from the line of Aman Jain from Augmenta Research. Please go ahead.

Aman Jain — Augmenta Research — Analyst

Sir, thanks for the opportunity. Sir, could you please provide the average Singapore GRMs for quarter 4 and what are they now, number?

Rohit Kumar Agarwala — Director, Finance

Quarter for Singapore GRM, it was 8.9. And now, I think around 6 to 7, if I am correct.

Aman Jain — Augmenta Research — Analyst

Okay, sir. That’s all from me.

Operator

Thank you. Our next question comes on the line of Prjanjali [Phonetic] Dutta from Jaideep Securities. Please go ahead.

Unidentified Participant — — Analyst

Hello, am I audible, sir?

Rohit Kumar Agarwala — Director, Finance

Yes. Yes.

Unidentified Participant — — Analyst

Yes, sir. What was the Russian crude processed in the second quarter?

Rohit Kumar Agarwala — Director, Finance

I will not be able to give the exact number now. I think we started from second quarter gradually, and for the full year, it was 1.4 million.

Unidentified Participant — — Analyst

Okay. You started from the second quarter gradually?

Rohit Kumar Agarwala — Director, Finance

Yeah. Yeah.

Unidentified Participant — — Analyst

Okay. And sir, one more for our purpose for Chennai Petro, do we follow meaning our GRMs would be closer to Singapore GRMs or Asian GRM?

Rohit Kumar Agarwala — Director, Finance

Singapore premium.

Unidentified Participant — — Analyst

Singapore premium. Okay. Thank you sir. That’s all from my side.

Operator

Thank you. We take our last question which is front the line of Tyaga Khaitan, an individual investor. Please go ahead.

Tyaga Khaitan — — Analyst

Hello? Am I audible? Good afternoon sir. Sir, I wanted to know if there are any projects in line to increase the efficiency of refinery and increase the profitability. As we com compare it with other companies, we see they are much more efficient than CPCL.

Rohit Kumar Agarwala — Director, Finance

In what parameter?

Tyaga Khaitan — — Analyst

So, more throughput and more, being more refineries more efficient so that the profitability increases.

Rohit Kumar Agarwala — Director, Finance

I’ll tell my understanding. Throughput is dependent on the design capacity. If my design is 11. I can do 11, 12. If my design is 15, I can do 16, you know. Capacity is dependent on design and CPCL design is 10.5 and we clocked 11.3 this year, the maximum. As far as efficiency also goes, that also depends on what kind of crude you are processing, what kind of products you are taking, you know, all those are there. So it is not factor of one, it is factor of multiple, but yes, for margin improvement, which is perhaps your focus, we are looking at pharma green hexane. We are looking at propylene, you know, output expansion. We’re also looking at, you know, LOBS conversion. So that the traditional product can be converted into more margin related products. As far as energy conservation goes, this is another efficiency parameter. CPCL continuously strives to do better, and in the last three years, every year has been the highest compared to the previous record.

Tyaga Khaitan — — Analyst

Fine. Thank you. Sir, a request that again, somebody has already asked you that we as an investors need to interact more with you because there are so many things that are get cleared during a concall, which we do not get anywhere in the print media. And so sincere request to have a frequent concall, sir,

Rohit Kumar Agarwala — Director, Finance

I hope too. Number of concalls, we will try regularly. And beyond that also I solicit your cooperation and your help. You tell my team what is required. We’ll try to evolve with standard format. Please try to find out a regular appear. And certainly this concall will be there unless there are any major efficiency, this will be regular.

Tyaga Khaitan — — Analyst

No, sir. After Q3 also there were certain, like in Mumbai, the company did meet individual mutual fund investors, but not like, general investors like us. So–

Rohit Kumar Agarwala — Director, Finance

I will surely look into it.

Tyaga Khaitan — — Analyst

Yeah. Thank you. Thanks a lot, sir.

Operator

Thank you. Ladies and gentlemen, we have reached the end of the question answer session. I now hand the conference over to Mr. Harshraj Aggarwalfor closing comments.

Harshraj Aggarwal — Anand Rathi Shares and Stock Brokers Ltd. — Analyst

Thanks you everyone. We would also like to thank the management for giving us an opportunity to hold the call and also the participants participating in the call. Thank you everyone.

Rohit Kumar Agarwala — Director, Finance

Thank you, Harsh.

Harshraj Aggarwal — Anand Rathi Shares and Stock Brokers Ltd. — Analyst

Thank you.

Operator

Thank you. On behalf of Anand Rathi Shares and Stockbrokers, that concludes this conference. Thank you for joining us and you may now disconnect your line.