Hindustan Petroleum Corporation Limited (NSE: HINDPETRO) Q3 2025 Earnings Call dated Jan. 24, 2025
Corporate Participants:
Rajneesh Narang — Chairman, Managing Director & Director, Finance
S. Bharathan — Director, Refineries
Analysts:
Varatharajan Sivasankaran — Analyst
Probal Sen — Analyst
Yogesh Patil — Analyst
Sabri Hazarika — Analyst
S. Ramesh — Analyst
Sumeet Rohra — Analyst
Kirtan Mehta — Analyst
Amit Murarka — Analyst
Somaiah — Analyst
Presentation:
Operator
Ladies and gentlemen, Good day and welcome to the Hindustan Petroleum Corporation Limited Q3FY25 results conference call hosted by Antique Stockbroking Limited. As a reminder, all participant line will be in listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call. Please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Vaidarajan from Antique Stockbroking Limited. Thank you. And over to you sir.
Varatharajan Sivasankaran — Analyst
Thank you. Sejal. A very good morning to all the participants and the management of HPCL. We have with us Mr. Rajesh Naran, Director Finance and holding additional charges CMD Mr. S. Bharatan, Director Refineries and Mr. K. Vinod, Executive Director, Corporate Finance and CFO. Once again extending a very warm welcome to all the participants and the management. I would like to hand over the floor to the HCCL manager for the opening remarks.
Rajneesh Narang — Chairman, Managing Director & Director, Finance
Good morning everyone. I am Rajneesh Narang, Director of Finance with additional charge of CNMD hpcl. Yesterday we had our board meeting for the quarter three. It’s a matter of right for us to say that we had an exceptional Q3 quarter.
Now during this quarter we had a profit after tax of 3023crores visa vis 29 crore in the Q3 of financial year 24. The improved performance is attributable to the robust physical performance and operational efficiencies in both our refinery and the marketing division. Coupled with the improved margins which we had. The total income.
The standalone revenue from operations is 1 18,936 crore. We service 1 18,443 crores during the third quarter of financial year 24. Average VRM during the third quarter was 6.$01 per barrel. We service 8.49 per barrel during third quarter of the previous financial year. During this period the Singapore GRM were around $5 a barrel and since Singapore GRM do not factor in the fuel and loss and the inventory losses and gains if I consider that aspect and the core GRM for The HPCL is 6.$89 per barrel which is the $5 of Singapore.
During this period HPCL refineries recorded its highest ever crude throughput of 18.53 million metric tons operating at 106% of the installed capacity. Virtually if you see there is an increase of 12.4% over the throughput of 16.49 million metric ton in the corresponding previous year. If we see the Q3 performance of the refineries the crude throughput was 6.47 million metric tons operating at 111% of the installed capacity resisting an increase of 21.2 million metric tons or the throughput of 5.34 million metric tons during third quarter of financial year. 24.
Now if we see today effective January also we have started operating the Vishakh refinery at the full capacity of 15 million metric tons during this period April December HPCL recorded highest ever sales volume of 37.12 million metric ton registering a growth of 7.6% as against 34.49 million metric tons during the corresponding previous year. In terms of our quarterly sales volume it is 12.87 million metric ton reducing a growth of 8.2% as against 11.9 million metric tons in the corresponding quarter of last year.
If we feed the performance of HPCL on the domestic front, the sales volume growth was 8.2% during the quarter as against the industry growth of 6.3%. So we have been consistently growing above the industry and the growth is 6.5% during April December 24 as against industry growth of 4.8%. In fact HPCL has recorded market share gain of 0.36% during the third quarter financial year. 24 now if you see the growth in terms of the motor fuels I.e. Ms. And HSD in the third quarter we sold 7.85 million metric tons a growth of 6.3% over the corresponding quarter and in case of LPG the company achieved a sales volume of 2.31 million metric tons again a growth of 4.9%.
The industrial products I.e. the direct sales where we sell the product to our industrial customers and all the sales volume was 1.25 million metric tonnes during the quarter, a growth of almost 25% over the corresponding period last year. Aviation continues to show robust performance with a growth of 26% over 3Q24 the sales volume of 285 million TMT during this quarter we expect that in the ATF in this current financial year we’ll be crossing the 1 million metrics and mark for the first the HPCL lubricant segment again sales volume was 178tmt, a growth of 11.5% over the corresponding quarter. To ensure that the product is available made available at all our selling points and the locations the pipelines throughput has also been maximized to 6.93 million metric tons a growth of 3.3% over the last year.
In terms of the CAPEX expenditures during this third quarter we have spent almost 2,900 crores and cumulatively for the period April To December around 9,500 crores have been spent. And in the month of January we have commissioned our 5 million metric ton chara LNG degasification plant. When the cargo was downloaded it was downloaded at the tanks over there and the commercial operations will shortly be started. Now this unit is being operated under our only owned subsidiary HPCL LNG Ltd.
We had in this quarter the previous quarter that is in the Q3 taken the board approval for a new project for Mumbai refinery that is the loop modernization and the bottom subgradation project. The estimated cost is almost around 4700 crores and the project is scheduled to be completed by March 20eigth. The project would enhance the base. Soil production of the refinery from 475 Atpa to 765 Atpa with production of superior grade base oils of Group 2 and Group 3. In addition, it will also increase the capacity of bitumen by approximately 487 kilo per annum with upgradation of fuel oil to bitumen.
Currently the fuel oil is getting exported and as such we do not get a better realization. But with this conversion to bitumen we’ll be able to realize better and as such this will result in not only the improvement of distillate yield for the Mumbai refinery but would also add good margins to the refineries. During this third quarter Mumbai refinery commissioned the VGO hydro treating in DHT. This will increase the Ms. Production by almost 100 TMT per annum. As regards our 9 million metric ton grassroot refinery in Barmer, the same is progressing in full swing and as on 31st December 24th, the total commitments on the projects are 71,814 crores and the actual capital expenditure which has been done is approximately 53,000 crore.
The refinery and petrochemical complex is expected to be progressively commissioned during the current calendar year. We would first be commissioning the refinery unit and we are targeting that by March 25th we will be doing the mechanical completion and after in the next quarter the unit would be commissioned and followed with that the PETCHEM unit would be commissioned. As regards our 3.55 million metric ton per annum residue upgradation unit at Vizag refinery, the mechanical completion the same the project the unit has been mechanically completed and currently pre commissioning activities are underway.
The OISD and PESO approvals will be coming and thereafter the hydrocarbon would be taken. In fact OISD will be visiting the facility in the next week. This so this is the first unit in the world using LCMAX technology which will enable highest conversion of bottoms thereby significantly improving the GRMs for the refinery on the full capacity. Although this capacity of this unit is 3.55 TM. Per annum, but we’ll be able to get a better distillate yield on the entire 15 million metric ton capacity of the refinery. As such, there would be a significant margin accreditation to HPCL on account of the commissioning of this facility.
During this quarter we commissioned around 450 retail outlets taking the total number of outlets to 22,953. The company also commissioned six LPG distributorship taking the total number to 6,370. We also commenced CNG sales in our CGTs in Darjeeling, Jalpaiguri and gas and commercial PNG sales in Shahjanpur, Badayung, thus strengthening our presence in the eastern part of during the quarter the HP Green RD center entered into an MOU with EIL as an exclusive technology and engineering partner for engineering, marketing and commercialization of the HP PSA technology which was indigenously developed at our RD Center.
This quarter the R and D Center has filed 14 page patents taking the total patents filed to 620 out of which 236 patents have been granted till 31st December as part of our value unlocking initiative being undertaken for the lubricant business benefit for the rollout of supply chain cost optimization, product mix spread and customer engagement initiatives have started accruing simultaneously. Approval for the carve out of the business continues to be actively pursued with the appropriate authority. We have already seeking approval from the government for carve out and as on date we are yet to get the approvals but the moment we get it it will take another nine months for us to do the carve out.
As regards the non fuel business of the company and providing value added services to the customers, we have added three happy shops taking the total number of shops worldwide nationwide to around 482 numbers this segment that is the non fuel retail business. Non fuel business is under extreme focus for the company and we intend to make more investments in this and try to capitalize on the retail space in terms of higher revenues from this segment. During this quarter Vizag Refinery commissioned the Wet Air Oxidation unit which is. In advanced stage of which is an advanced low pressure technology for treatment of spent caustic streams. In addition, environmental benefits would also accrue.
On account of this, our wholly owned Green subsidiary HPRG assigned MoUs with government of Rajasthan for setting up solar and wind hybrid projects. We have sought around 2 to 3,000 acres of land from the government for setting up new green renewable the solar and hybrid projects over there. Similar MOUs have been signed with the Government of the Air also. Further as regards the green part is concerned, we have issued 12 LOIs for CDG plants taking the total number of active LOIs to 141 with total CBG production capacity to 878 TMT per annum.
In terms of the ethanol blending activities, we have done 16.2% during the quarter and blended off approximately 57 crore liters in Ms. And we have commissioned additional 50 CNG facilities in this quarter taking the total number of retail outlets with CNG facilities to 1850. And in terms of EV charging we have solved the 5000 mark of EV facilities at our outlet. So this is what I wanted to share before I can take up the questions now. The forum is open for any questions on our comments. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star on their touchstone telephone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pro Bilseen from ICICI Securities. Please go ahead.
Probal Sen
Thank you for the opportunity. Good morning. I have three questions. Number one you mentioned about the refinery part of the Rajasthan of the Bar refinery getting completed by March and maybe commissioning by June. In how many months can we expect the typical portion to be commissioned.
Rajneesh Narang
Would take maybe by September we’ll be able to do the mechanical completion followed by that the commissioning would happen.
Probal Sen
So sir, is it safe to say FY27. We should be able to see year one of complete operations of the of the Barme refinery.
Rajneesh Narang
Yes, 2627 definitely. But we are hoping that December 25th we’ll be able to commission. So the first quarter, maybe some stabilization issues would be there, but 2627 would give the full benefit.
Probal Sen
Right, got it. So the second question was in this quarter, how much of our crude came from Russia and what is our contract situation with respect to Q4? Have we tied up some volumes for Jan and Eb or. You know, it’s completely open as of now. So how are we looking to mitigate the disruption to whatever extent it happens of Russian crude?
Rajneesh Narang
See, we are on a monthly basis consuming almost 35 to 40% of Russian crude. We have already tied up for the same. Rather our entire crude requirement up to March has already been tied up. That includes some cargoes from the of Russian cargo. Also I don’t consider this as a disruption because it’s not that perennially we have been only using Russian crude. Prior to that also we were, we were. We were running operating the refineries. Only thing is the Russian crude after the discount had come, it was adding more value to process the same. So we were using it.
So enough of crude is available. There is no dearth as regard the crude availability is concerned with the commissioning of our Vizag refinery where we offer with rough and all coming in the capability to produce heavier crude will further increase. Rather we can expand the basket of crude today also we are getting the crude from almost 40 odd countries. So there’s no issue as regards the availability of crude is concerned. Crude is sufficiently available, both heavy crude as well as the other crude. And we don’t foresee any disruption as regard the crude participants.
Probal Sen
I understand. My point was more about disruption. What I meant was that obviously on the cost side it would have an implication whether small and big something remains to be seen. But that discount will obviously not be there. So that was my question. I understood your point.
Rajneesh Narang
So I think it is too premature to say that the Russian crude will not come at all. With these decisions, the US sanctions and all the immediate reaction is that the crude may not come and all. But we’ll have to wait and see as to how the market unfolds. What is what, how the supply chain this for this on this front happens. And accordingly then maybe it would be better to conclude rather than straight away jump to a conclusion that. The Russian crude will not come at all. Let us wait and see as to how things unfold.
Probal Sen
Sure. One last question if I may. With respect to the LNG terminal at Shara, have we. You know. Of course our internal requirements might be there which we will use this terminal. But other than that have we signed any long term offtake contract from this terminal?
Rajneesh Narang
We are progressing. As regards signing of the long term contract is concerned it will may be concluded in the very near future. Yes, we. Till the time we don’t tie it up we’ll be getting the cargo on a spot basis and meet the requirement. And maybe we may pool it with our domestic gas and try to sell it in the market. Already there are some potential parties who have already approached us for the capacity booking.
So this terminal is going to be a tolling model. So whether we bring our own cargo or anyone else can bring and also store it over there. So this. This is going to operate on a tolling basis. In terms of our requirement we will be sourcing for HPCL own captive use plus for Rajasthan refinery and also for hmel. So if I. If I look at it, maybe in the near future we may have our own captive requirement of 1.5 to 1.75 million metric ton plus the opportunities in the market.
Probal Sen
Understood sir. That’s extremely helpful. I’ll come back if I have more questions. Thank you very much. All the best.
Operator
Thank you. The next question is from the line of Yogesh Patil from Dollar Capital. Please go ahead.
Yogesh Patil
Thanks for taking my question, sir. Sir, your date Is declined by 12,000 crore approximately compared to the quarter second FY25. What was the major cash flow which help you to repay the date? Is there any adjustment?
Rajneesh Narang
There’s no adjustment. It is better operational performance which is getting reflected in the results also. And one area is this. Yes. Around 2000 crores. Had it had come down because the oil bonds had matured so that that were used for liquidating the loan.
Yogesh Patil
Okay. And sir, pertaining to the same in the last quarter guidance for the Vizag refinery unit. You said that 11,000 crore is it to be capitalized and which is expected in a quarter 4 FY25 post commissioning of this Vizag RUF facility. Will you consider it and will it increase the date again? Is that a correct understanding?
Rajneesh Narang
It will see this amount. When I say we’ll be capitalizing means that amount. Amount has already been incurred. Now. Now this as regard the total capital expenditure is concerned more than 97%, 98% of the expenditure in. In Vic if Henry has already been done, it’s only when my. When we say capitalize means we’ll be transferring it from work in progress to the asset.
Yogesh Patil
Okay. Okay. Answer. Is there any oil product inventory losses during the quarter? Could you please share the number with us? And how many days of oil product inventory generally you maintain?
Rajneesh Narang
See if you see during the period in Q2 the Brent crude was around average around $80 a barrel. And whereas in the Q3 the average crude barrel was around $75 a barrel. Now if you look at it, the prices had softened during this on account of which we had inventory losses. And during this quarter in refinery we had a loss of 300 inventory loss of 355 crores and in marketing around 460 crores was the inventory loss cumulatively for the period April December in refinery it is 1100 crores. And in case of marketing it is 1450 crores.
Yogesh Patil
What was the amount for the quarter three in case of a marketing segment inventory loss.
Rajneesh Narang
INR460 crores. Thanks a lot sir. And in terms of number of days of thing and the crude we have around 15 to 20 days of inventory. And in case of finished goods it is around 25 to 30 days.
Yogesh Patil
Thanks a lot sir. It was really helpful.
Operator
Thank you. The next question is from the line of Sabri Hazarika from MK Global Financial Services. Please go ahead.
Sabri Hazarika
Yeah. Good morning sir. So a few questions firstly. So now what kind of GRMs are you targeting for next year on the standalone business Mumbai and Vizag combined.
Rajneesh Narang
See if you look at the forwards of Singapore up to July and all the GRMs are likely to be in the range of five to six dollars a barrel. So normally we make higher than the Singapore grm. So that trend would continue. And with commissioning of the rough unit at Vishak refinery we’ll be adding 2 to $3 per barrel more at the Bisex refinery. So that will be an increase. Incremental revenue.
Sabri Hazarika
Okay, and second question is on hml. So can you share with us the profitability figures and the GRM for Q3 in particular? I saw the 9 month GRM in the presentation, but for Q3 how much it would be?
Rajneesh Narang
Q3 is around $9 a barrel over there.
Sabri Hazarika
So this includes the Pet CAM part also or it’s just.
Rajneesh Narang
No, no, this is the refinery part.
Sabri Hazarika
And what was the profitability for Q3.
Rajneesh Narang
There was a loss as regards the integrated operation is concerned, the loss was 700 crores. Is the loss primarily the loss is in the Pet chem part.
Sabri Hazarika
And when do you expect any sort of like turnaround or profitability on this as a combined unit?
Rajneesh Narang
No, see in fact the polymer prices are subdued. We hope that there will be a trend, reverse trend on the same and the moment that happens maybe the it will start operating or it should start reflecting in the refining part is absolutely no issue. Only the Pet chem because of the subdued prices is what is hitting the.
Sabri Hazarika
So it’s operating normally as a whole. You are just saying it’s because of the polymer prices. Only the losses are there.
Rajneesh Narang
Yeah. As regard the operating part is concerned, it is operating beyond 90% and in terms of the EBITDA, EBITDA is positive for the refinery there is an operating profit but the interest and depreciation is what is pulling it.
Sabri Hazarika
Sir, and last question. So what is your overall view on LPG subsidy and are you expecting the same? Have you like gone got anything? I mean have you like pushed for it recently?
Rajneesh Narang
The total under recovery for us on LPG account as on this Q3 quarter is almost 7,600 crores out of which 3,100 crores is in the Q3 itself. We have also read in media that the government is likely to consider the same in the budget. Maybe next week we will come to Nomad as to how much subsidy is being allocated on that count. And we are hopeful definitely the government will consider it and we’ll be able to realize it in this financial year.
Sabri Hazarika
Okay, fair enough. Thank you so much and all the best.
Operator
Thank you. The next question is from the line of S. Ramesh from Nirmal Bank Equities. Please go ahead.
S. Ramesh
Thank you and good morning. So if you look at your refining performance, can you help us understand how you have managed to improve the refining margins in 3Q and how do you see the current spreads? Because you see the global spreads, they are a little bit weak and retail margins are under pressure. How do you see the, you know, performance in the current quarter in terms of mining and marketing?
Rajneesh Narang
See first if you see the margin is concerned. When I in my initial mention I made a reference that it is not only the margins but better margins but also the operating performance which has got us the incremental margin. Now if you see both our refineries are operating at like Vizag and Mumbai operated at more than 110% of the capacity. Even if you see the fuel and loss has been significantly controlled. The fuel and loss was almost 6 point something percent in Mumbai refinery and in case of vezec it is 7%. So both the operational availability at these refineries has significantly improved and the throughput is being run and default more than the name plate capacity. On account of which we are getting higher yields as well as the products.
As regard the GRMs are concerned, the GRMs have been like Singapore GRM benchmark. I gave that it is around $5 a barrel. So that same trend is likely to continue in the near future as per the forwards which are available. So we trend the same would be continuing. Yes. If you see right now there has been softening as regards the Ms. Gasoline are concerned in Singapore. But the FO cracks are the negative. FO cracks have strengthened. So that is a plus factor. But in the near future if we look at the next 2/4 the GRMs as were there in the Q3 would continue is what is the prediction.
S. Ramesh
Okay, so now if you look at the impact of Vizag commercialization in terms of the interest and depreciation based on the nine month numbers, how do you what will be the incremental impact of interest and depreciation Say from next year for HPCL standalone.
Rajneesh Narang
It will go up by another 500 to 600 crores.
S. Ramesh
Interest and deposition together I’m talking…
Rajneesh Narang
Interest will remain unless I further reduce the borrowing. And if I continue to make. Good margins. The. The borrowings will only come down. So borrowings have already got factored. As regard the power current level is concerned only to the extent of what I am capitalizing that would. That would come in the PNL that the total what I have incurred is around 2,600 crores in PNL and around 700 crores is 600 to 700 crores is there in. In the is getting capitalized. So that will move to the PNL. So the additional interest impact would be around 600 to 700 crores and depreciation would be around 600 crores.
S. Ramesh
Okay. So HMEL, can you help us understand the depreciation interest year to date? As you said, there is a positive EBITDA and the loss because of that. So we can give some numbers. We’ll be grateful.
Rajneesh Narang
I will share it with you separately. Okay.
S. Ramesh
Okay. So if you look at the refining capacities globally, is there any number you consider in terms of how much you expect in terms of capacity closures? You know, to the extent that that may help the underlying spreads. What is the sense you get on that?
Rajneesh Narang
See in the near term normally in. In the month of January, February, there are a lot of shutdowns planned shutdowns which are taken. So I’m only hoping that the refining margins would only improve because the product. There would be a bit of product shortages during this period. So the margins are likely to improve only I. I don’t foresee a continuous declining trend as regard margins.
S. Ramesh
And the last Note on the LNG subsidiary, have you started commercial operation in 3Q and is there any expectation of loss in the next one or two quarters before you are able to achieve break even.
Rajneesh Narang
You are talking about which company?
S. Ramesh
LNG subsidiary.
Rajneesh Narang
Yeah. Now we’ll be starting the commercial operation till so initially yes definitely there would be some losses but that will be made up in once we achieve the capacity utilization.
S. Ramesh
And when would that be?
Rajneesh Narang
We are hoping by in a maybe in about one year or two years we’ll be able to break even as regard the part operation.
S. Ramesh
So if I can squeeze in one more thought in cgd what is your thought in terms of ramping up and achieving EBITDA Positive your standalone.
Rajneesh Narang
We are already EBITDA positive as regards our standalone in Gin Sonipath and all. We, we are. We are. We are positive as regard our.
S. Ramesh
Okay, thank you very much and all the best.
Operator
Thank you. The next question is from the line of Sumit Rohra from Smartson Capital Private limited. Please go ahead.
Sumeet Rohra
Hi sir. Very good morning. Sorry to interrupt. I would request you to please use your handset. Your voice is not very clear. Yeah, sure. Yeah. Hi sir, firstly, I mean a very good morning to you and the entire team at hbcl. You have done extremely splendid, you know, financial performance, you know, in terms of core metrics. So sir, actually you know, I was just you know, looking at it that as you highlighted that you know the LPG under recovery is about 7,600 crore which effectively is not our domain, which is the government of India.
And in spite of that, you know you’ve reported 4,100. So sir, effectively if I compare year on year on the nine months of 31, 12, 20, 23, you are exactly at the same matrix which is 11,800 crore, which is highly commendable in such a challenging environment. But now sir, my question to you is more as an investor. So sir, if you see, I mean, you know, adjusting for the LPG which again is not, you know, the problem, you know you have done a 55 rupee EPS, you know, and so assuming that you know, crude continues to remain where it is and with Mr. Trump, you know, now talking about Saudi to lower oil prices, you know, so effectively Brent would be around some, somewhere around here or maybe you know, lower by $5.
So effectively sir, your core operations are doing extremely well, you know and you would probably end the year with a similar number like last year which is about 14,15,000 crore, which is commendable. Also sir, you know in terms of IC your throughput is up by about 12, 12 and a half percent. And you know your sales market sales are also up about 9, 10%. This is in spite of economy which is, you know, challenging. And you see today various sectors are posting degrowth so it is extremely, you know, exciting that you know, you were doing so well in an environment which is, you know, as tough as it, as it is.
But, but sir, now my question is more from an investor point of view. You know the thing is that today in spite of you doing so well, you know, it doesn’t deserve the kind of valuation which today HBCL commands, right? Because I mean if you’ve done, you know, if you end up with a 75 rupee EPS for the year, I mean a stock or a high quality stock which has got an ROE of 25% surely does not, you know, deserve to be trading at five times multiple, right? You, in spite of having you know, a lubricant, you know, which is basically three times the size of Castrol.
So effectively, you know, sir, our lubricant itself would be about what, about 30,35,000 crore on a bare minimum. So, sir, you know, if, you know, some measures could be taken to, you know, expedite the value unlocking that would, you know, go a long way in, you know, building the value for this glorious entity which you have now. Sir, you know, my question to you is basically, you know, on the financial metric which are as strong as they are.
So, sir, my sense is that, you know, the $5 billion EBITDA and 16 to 18,000 crore PAT which we were expecting in FY28 could actually come as soon as. Next financial year. Right. Because I mean I clearly see that, you know, your Vizag refinery, which you explained the residue upgradation project is also now going to commission very soon. So sir, can you. Can you explain. So that will basically improve GRMs by 3 to $4 on the entire 15, 16 million metric. Done. Right. So that will actually improve the financial metrics in a big way. Right? Sir, come back.
Rajneesh Narang
Yes, you are right. Okay. Simultaneously we are also working on debottlenecking Vizag refinery. And maybe the capacity will go up by. Will go up to 17 million metric tons. So that depot, I think Director Refineries is here. He can add something on that.
S. Bharathan
Yeah. Once we have already stabilized most of the units under this modernization project. Now we are looking at better utilizing the capacities. So definitely in the coming years we’ll be crossing 17 million metric tons along with all the other value added products.
Sumeet Rohra
Sure, sir. And sure, sir, just. I mean one small, I mean, you know, point I have is that sir, now you know, with our peak debt, you know, which is now gone and you’ll be throwing out cash like water. I would sir, seriously request you that at some point of time, you know, you should consider a liberal buyback. Because I mean HBCL has been the only company, you know, in PSU’s to do a buyback from market. So I really request you to please consider the same. Because clearly this company does not deserve the valuation which it is getting today. So. So that’s something I would really request you to please.
S. Bharathan
Yeah, definitely. We’ll evaluate the same and let us hope that what you have stated and what we envisage we consistently deliver on that and definitely will review all what you have suggested. Thank you.
Sumeet Rohra
Thank you very much, sir.
Operator
Thank you. The next question is from the line of Keertan mehta from Baroda BNP Paribas Mutual Fund. Please go ahead. Mr. Keetan, I would request you to unmute your line and speak please.
Kirtan Mehta
Thank you sir for the opportunity. Couple of questions from my side on the hmel. What would be the breakeven spread needed on polymer for the operations to return to the profit? Would you be able to give us some color?
Rajneesh Narang
See, a margin of 150 to $170 per metric ton is what would enable SLM to be breaking.
Kirtan Mehta
And what would be the current margin level against this?
Rajneesh Narang
They are getting around the 70 to 80 today. The prices are quite very muted, very soft and the entire sector is struggling. So let’s see. There are two things. One is from as regard the operations at the Hmel is concerned. Their facilities are fully stabilized. They are operating at more than 90 95% of the capacity. The pricing front they are approaching, they are approaching the government also as to look at as to whether they can put in some tariffs so that the product does not come in. On various avenues, attempts are being made as to how we can improve the this entire pet chem industries, the entire sector. With the Chara lnd terminal.
Kirtan Mehta
Will you be able to start picking up gas? Is the pipeline complete?
Rajneesh Narang
Yeah, yeah it is. Our Chara terminal is connected to the natural grid national grade. So that is not going to be an issue at all.
Kirtan Mehta
HMEL pipeline is connected to the Maisana Batinda pipeline where last leg of few kilometers were left. So is that leg also complete for HMEL to receive the gas?
Rajneesh Narang
Yeah, to my knowledge GIGL or GITL has already connected there. Chamil is continuously consuming gas for more than one and a half years now.
Kirtan Mehta
Right. And second question was on the Barmer refinery you mentioned about the capex commitment of 71,000 crore. What is our comfort onset of managing the CAPEX within the targeted budget or is there a possibility of any CAPEX escalation?
Rajneesh Narang
As of now we said that the commitment what we have made is around 71,800. Of course so most of the EPC contracts and all those have already been done. So those things have already got factored as regard the commitment is concerned. So what would be only the soft cost or the IDC which will get which would be coming here? So with the commissioning in this current financial, current calendar year being planned.
Kirtan Mehta
I will have to work out as to what would be the exact details but not nothing significant is likely to. And in terms of the project contingencies, what level of contingencies would be available to take care of any potential escalation?
Rajneesh Narang
That’s what I stated that all EPC contracts and all have already been placed and most of them are some have reached a stage of 95, 97%. There are four units which have already got commissioned. So now at this stage I think contingencies are not an element to be given too much of weightage because if the unit has reached a significant advancement as regard their execution is concerned.
Kirtan Mehta
Right. Thanks for this clarification.
Operator
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Amit Murarka
Good morning. Thanks for the opportunity. So the first question was refinery. So you said that you’re looking at completion by the end of this year. So the debt is currently not getting consolidated I think because of JV structure as you had mentioned earlier. So once it gets commissioned do you start including the debt in your console books or will it stay outside the books?
Rajneesh Narang
No, it will not be consolidated. Because as per India’s requirements we cannot. We will not be consolidating the same. But for the sake of investors or anyone analyst requirement we will definitely share those details. Not even today the Debt is almost 34,000 crores in HRL books.
Amit Murarka
Got it. So even post commissioning you will not be consolidating. It will just be associate income or loss.
Rajneesh Narang
We’re doing the line by line consolidation. Because the terms of the JV agreement and all we have got it analyzed as per that strictly in line with the India’s requirement we will not be consolidating but it will be putting only a line entry for the profit consolidation. But any details which is. Which are required that that will definitely be shared.
Amit Murarka
And is there any underwriting from you for that debt?
Rajneesh Narang
No, there’s no underwriting. Both the. Both the promoter that is Government of Rajasthan and HBCL have given the sponsor support undertaking. Both of them have given it for their respective shares. We hold around 74% and the government of Rajasthan holds 26%.
Amit Murarka
Understood, understood. And CAPEX plan. So could you kind of give at least some understanding about next year’s CAPEX outlook?
Rajneesh Narang
See, this year we may be ending with the capex of 13 to 15,000 crores. And the same trend would continue for next few years.
Amit Murarka
Sure. That’s all. Thank you.
Operator
Thank you. The next question is from the line of Soumya from Eventis Park. Please go ahead.
Somaiah
Thanks for the opportunity. Sir. A few questions. Sir, first can you give some color on the Vizag bottom upgradation project? So in terms of the input and output and what are the kind of spreads that we are seeing being both the products when we say a net impact of $3.4GRL.
S. Bharathan
Yeah. Vizag. This particular unit is designed for almost 93% conversion into distillates. And as already told by chairman the dollar per barrel on full throughput of the refinery will be 3 to 4 will be fully eliminated.
Somaiah
And the output would be bitumen.
S. Bharathan
The output of the plant is mainly diesel naphtha and gas oil for secondary cracking.
Somaiah
Let’s say between spreads that you see between. Let’s say a four to bitumen today where are the spreads like 10,000.
Rajneesh Narang
It’s around 10,000. 10,000 rupees.
Somaiah
Got it. Sir. Sir, and also when you said capex around 13,000 to 15,000 crore kind of a run rate. So now you have announced this 4700 crores. So this is included within that the modernization project.
Rajneesh Narang
Yes, yes. We have also started the Vishak Raipur pipeline. And shortly we’ll also be doing the COT at Mumbai refinery. So we have various other projects also up our sleeve. So those also would be. Once we take the board approval we’ll be sharing with. There are one or two more pipelines which are being planned for LPG.
Somaiah
Any split if you can give between refining, marketing, CGD within this 14,000 crores per annum.
Rajneesh Narang
We will be doing around 4000, 3000, 4000 crore in in the refining segment. And in terms of marketing we do around 6 to 8,000 crore. And the balance is the equity contribution which we give in our various JV subsidiaries. That is hrrl, HPLNG and others and even HPRG where we are doing lot of renewable projects. So broad split in is refineries, marketing and the corporate. That is the contribution to the JV subsidiary.
Somaiah
How much of equity contribution is still pending from our side.
Rajneesh Narang
We have given almost 13,000 crore. And the total contribution from our end is around 18,000.
Somaiah
Sir. Also when you said chara that 1.5 MMT of you know gas demand for internal consumption. So is there something that we are currently drawing from someone else and that gets diverted or it’s entirely fresh demand once Chara comes online.
Rajneesh Narang
Today we are seeing gas in a limited way in our Mumbai Refinery so that we are sourcing it from. We are purchasing and using the gas at Vizag refinery. The. The Shrieka Kulam Vishakhapatnam pipeline that that has to be completed. In fact the EUI is already on that was being executed by APGDC. But they have now PNGRB is advertised again for completing the pipeline. Some 20 30km is left out. Otherwise the refinery as part of our VRMP we have already make it compliant for using natural gas. Rajasthan refinery will be fully compliant. And HMEL is already using gas.
So all these four units or refineries will be switching to gas. And so that would be one major anchor for us as regarding the gas expense. Plus once we tie up with the for our long term gas we’ll be also aggressively marketing it. Marketing the gas and also for the various gas which we are operating in almost 25 gas in 14 states. So that we will be also using our own gas since it is connected already to the grid.
Somaiah
Sir, any breakeven utilization that we have for Chara that we’re looking for.
Rajneesh Narang
At 30% it gets. We achieve the break even at 25 to 30%.
Somaiah
So one bookkeeping question. If you can give the net debt number at a standalone entity and also at HML Bama you say that’s around 34,000 crores.
Rajneesh Narang
At HPCL level 54,020 is the total debt. The long term debt is 44,000 and short term is around 10,000.
Somaiah
This. I mean this is the net debt number sir.
Rajneesh Narang
Or is the gross raise the net debt and also at HMU HML is around 30, 33, 34,000.
Somaiah
Sure. Thank you sir. This is very helpful.
Operator
Thank you. Ladies and gentlemen, due to time constraint we will take that as the last question. I would now like to hand the conference over to Mr. Badarajan for closing comments.
Varatharajan Sivasankaran
Thank you Sejal. I’d like to give the floor to Mr. Vaishnish if he has any closing comments.
Rajneesh Narang
Thank you for the various questions. We’ll continue to put in our efforts to replicate the performance both in terms of operational and the financial parameters. Yes, I can only say that you have been supporting us all along. Our CAPEX plans, which we had unfolded a few years back, they are now almost on the verge of getting completed. Maybe this year is going to be the one where we will start it. We will start realizing the incremental benefits out of these. So better times are there ahead of us. So thank you for all your support and God bless you all. Thank you.
Varatharajan Sivasankaran
Thank you, sir. I wish to thank the management as well as all the participants for taking time out to have this discussion. Wish me all the best, sir. And thanks all the participants. Have a nice day.
Operator
Thank you. On behalf of Antique Stock Broking Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.