Indian Oil Corporation Limited (NSE: IOC) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Anuj Jain — Director, Finance
R V N Vishweshwar — Executive Director, Corporate Finance and Treasury
Analysts:
Varatharajan Sivasankaran — Analyst
Probal Sen — Analyst
Yogesh Patil — Analyst
Sumeet Rohra — Analyst
Vivekanand S. — Analyst
S. Ramesh — Analyst
Amit Murarka — Analyst
Vikash Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Indian Oil Corporation Limited Q3 FY ’25 Earnings Conference Call, hosted by Antique Stock Broking Limited. 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]
I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stock Broking. Thank you, and over to you.
Varatharajan Sivasankaran — Analyst
Thank you. A very good morning to everyone. It’s my pleasure to welcome the IOCL management. We have with us — and the participants to this call. We have with us Mr. Anuj Jain, Director Finance; Mr. R. V. N. Vishweshwar, ED Corporate Finance; Mr. Pramod Jain – CGM Treasury; and Mr. Prabhat Himatsingka – GM Treasury.
Without much ado, I hand over the floor to Mr. Anuj Jain for the opening remarks.
Anuj Jain — Director, Finance
Thank you. Dear investors and analysts, a very good morning, and a very happy New Year to all of you. I take this opportunity to welcome all of you to the Conference Call, organized by us, post announcement of the third quarter results of financial year ’24, ’25. I thank each one of you for joining the call. I believe you would have gone through the accounts hosted on the website and also through the updates received by most of you.
I would like to briefly dwell on the results to provide additional clarity and insight. This quarter we have registered a profit after tax of INR2,874 crores, which was INR180 crores in the preceding quarter and INR8,063 crores in the corresponding quarter of financial year 2024. From a nine month perspective, the PAT is INR5,697 crores as against INR34,781 crores in the nine month of financial year ’24. Revenue from operations during this quarter is INR2,16,649 crores as against INR1,95,149 crores in the preceding quarter of this year. The revenues of the corresponding quarter of FY ’24 was INR2,23,012 crores. Friends, despite the global volatilities and challenges, Indian Oil achieved strong operational performance and historically highest sales volume.
Now, the operational highlights will be briefed by ED Corporate Finance and Treasury, Shri R. V. N. Vishweshwar. Over to you, Mr. Vishweshwar.
R V N Vishweshwar — Executive Director, Corporate Finance and Treasury
Thank you, sir. Good morning to all once again. It’s been quite a time since we have interacted with you all. So I’ll just share across the highlights and performance parameters.
As you all may be aware that the global financial landscape in the year 2024 was marked by significant volatility on the back of geopolitical uncertainties ranging from global inflation, ongoing Russia Ukraine conflict, weakness in Chinese economy and the US Presidential election results. We witnessed Indian rupee to depreciate to historic lows. While the Indian rupee’s depreciation has intensified further in January ’25, however, rupee witnessed lowest volatility against the US dollar in years and depreciated 2.9% during the calendar year 2024 against the last 10 years average of 3%, mainly due to inflows in Indian bond market after inclusion in JPMorgan Index to keep USD-INR stable.
India’s high import dependency for crude oil makes the OMCs susceptible to exchange losses due to depreciation in the Indian rupee against the US dollar. On the interest rate front, despite the US Fed initiating much awaited rate cut cycle by reducing the US Fed rate by 100 basis points in 2024, the US Presidential election results kept the long-term U treasury yields volatile and elevated. Despite the headwinds, Indian Oil remains steadfast in its commitment to ensure the energy security of the nation by making available energy to every nook and corner of the country at an affordable cost. You would have seen from the data published by PPAC that petroleum products consumption in the country for the nine months ended 31st December ’24, that was 178.5 MMT is higher than the corresponding period of last year, which is 172.6 MMT. As per the latest PPAC estimates published in January ’25, India’s petroleum product demand is projected to grow to reach an all-time high of 252.9 MMT in the next financial year, FY ’26, marking a 4.65% increase from 241.8 MMT estimated for the current year, that is ’24-’25. There is now a consensus among the domestic and international agencies based on the interactions which we are — which we had that the demand of petroleum product in India is to grow in the coming years.
To meet the increased energy demand of the nation, Indian Oil is investing about INR72,000 crores for enhancing the stand-alone refining capacity by about 25% to reach about 88 MMTPA. At the same time, we are also augmenting our marketing and pipeline infrastructure to ensure last mile delivery of energy to every citizen. The company is leveraging its research capabilities to enhance Aatmnirbharta and to enhance customer delight through industry first and exclusive offerings like branded fuels, XP100, XP95, XtraGreen, XtraTej, niche aviation fuel like AVGAS 100 LL, reference gas oil and which is — and this reference gas oil is available with select companies worldwide, niche fuel for Asian Road Racing Championship STORM to take a few names.
Further, in view of changing mobility preference of customers, the company is transforming its retail outlets into energy stations. These energy stations are envisioned as comprehensive energy solutions along national highways and green expressways, offering a range of fuel options, including commercial transport fuel, LNG, CNG and charging station for EVs. The company’s CRM solutions have been embedded across its petroleum and petrochemicals marketing segments [Indecipherable] has a customer-centric digital platform, EPIC Electronic Platform for Indian Oil customers, which provides unified customer experience for all its line of business.
On the sustainability front, Wildlife Energy of India, Indian Oil is strengthening the self-reliance and energy sovereignty of India by investing in conventional fuels. The Corporation is steadfast in its unwavering commitment of sustainable and bright future. Indian Oil is fueling its Ascent and clean energy transition by venturing to a range of alternative energy solutions around natural gas, CBG, biofuels, hydrogen and e-mobility, which will be shaping the future energy landscape of the world. Indian Oil is steadfast in achieving net zero plan by the year 2046. The company has aimed to elevate the contribution to energy sector from the present 9% to 12.5% by the year 2050. Indian Oil plans to build a renewable energy portfolio of 31 gigawatt by 2030 by developing large-scale renewable energy capacities for serving its captive power demand and with focus on market demand opportunities and has formed a wholly owned subsidiary, Terra Clean Limited, which would invest in cutting-edge technologies to create a more efficient, sustainable and low carbon energy ecosystem in India. Collaborations have also been forged with leading companies like NTPC Green Energy Limited and SJVN Limited to infuse green power for refinery expansions and expand the renewable energy bouquet. We are working to deliver 20% ethanol blended fuel by this year and has achieved ethanol blending of about 18.2%. We are also working on advanced biofuels through its 2G, 3G ethanol plants at Panipat, a sustainable aviation fuel plant of 86.8 TMT per annum capacity is being set up at Panipat. Indian Oil is the first company in India to sell CBG under the IndiGreen brand to customers through 97 retail outlets in 37 plants.
Indian Oil has been leading the nation in harnessing hydrogen and its application as the ultimate sustainable energy of the future. Indian Oil is reinforcing the hydrogen ecosystem and developing a 10 KTA green hydrogen plant at Panipat refinery. To promote hydrogen mobility, we have set up India’s first hydrogen dispensing station at our R&D center in Faridabad, followed by a station in Gujarat refinery. Indian Oil is undertaking trial run of 15 number fuel cell buses in Delhi NCR to promote green hydrogen and fuel cell technology in heavy-duty e-mobility. Our collaborations with industry leaders like ReNew and L&T will strengthen the green hydrogen ecosystem in India. The collaborations with leading Israeli e-mobility company, Phinergy, to develop and commercialize novel aluminum air battery technology and with the global energy storage company, Sun Mobility, Singapore for creating battery swapping infrastructure in the country are significant strides towards nurturing e-mobility ecosystem in the nation. As we step into 2025, we are optimistic about the opportunities that lie ahead of us.
Now while talking about the numbers on the key highlights, the average price of crude Indian basket, 76% Oman, Dubai and 24% Brent during this quarter was at $73.86 per barrel, a reduction of about 6% from the average price of the immediate preceding quarter, that is quarter two FY ’25, that was $78.89 per barrel. If you compare on a corresponding quarter basis, in quarter three of ’23-’24, it was $83.86 per barrel. There is a reduction of 12%. Various geopolitical factors starting from the imposition of Russian sanctions by the US, uncertainty over the impact of US presidential — President Donald Trump’s energy policies and proposed tariffs on the market have kept the crude oil prices volatile.
With respect to the crack spreads, Indian basket dollar per barrel. MS cracks has marginally improved during this quarter at $3.29 per barrel as compared to the previous quarter of $3.04 per barrel. Cracks are a little lower than the corresponding quarter of ’23-’24, which was at $3.47 per barrel. For HSD, the crack spreads during this quarter is $12.19 per barrel and have outperformed the preceding quarter, which was $9.77 per barrel. However, the cracks are lower than the corresponding quarter of FY ’23-’24, which was at $20.58 per barrel.
In the petrochemical space, the spreads in dollar [Indecipherable] of major products have witnessed a mixed variance over the last one year. The spreads for polymers have remained more or less similar. The spreads of PT has witnessed a sharp decline and the spreads for MEG while has improved, but still continues to be negative. The weak global economic outlook and new capacities continue to weigh high on the petrochemical prices globally.
Now let me briefly touch upon the major verticals. First, I’ll touch upon refineries. The throughput during the quarter was 18.1 MMT with a capacity utilization of 102.3%, which is higher than the preceding quarter, which was 16.7 MMT of a capacity utilization of 94.5%, but was slightly lower than the corresponding quarter of ’23-’24, which was at 18.5 MMT, having a capacity utilization of 105.1%. The distillate yield was at 82.2% during this quarter, which is same as the previous quarter, 82.2%, but better than the corresponding quarter of FY ’23-’24, which was at 80.5%. Fuel loss during this quarter was 8.7%, whereas during the preceding quarter, it was 9.2%. Our refineries have registered a GRM of $2.95 per barrel during this quarter as compared to $1.59 per barrel during the previous quarter.
[Indecipherable] for the nine months ’24-’25 was $3.69 per barrel vis-a-vis the nine months for ’23-’24, which was $13.26 per barrel. The normalized GRM after stripping off inventory impact and factoring the price lag for the quarter is $6.60 per barrel as against $3.13 per barrel for the previous quarter. If we compare on a nine monthly basis, the normalized GRM for the current nine months is $4.22 per barrel as against $12.62 per barrel in the corresponding period of last year.
Now coming to pipelines. The capacity utilization was about 69.6% during this quarter as compared to 69.1% in the previous quarter, throughput of 24.9 MMT in the quarter three of FY ’24-’25 vis-a-vis 24 MMT in the quarter two of FY ’24-’25. As on 31, December ’24, Indian Oil has total pipeline network of more than 18,500 kilometers, including product and crude oil, which accounts for more than 50% of the total pipeline network of the country. The large pipeline network provides strategic access to the markets and helps reduce the cost of placement of products.
Now touching upon marketing. Indian Oil, I will add to say, has achieved the highest ever sale of petroleum products during the quarter of 23.38 MMT as compared to 20.52 MMT in the previous quarter. This is the highest ever in the history of Indian Oil for any particular quarter. On a nine monthly basis, sales have improved. That is 66.61 MMT in nine months of ’24-’25 vis-a-vis 65.66 MMT in the nine months of the previous year.
On the petrochemical side, the sale of petrochemical products during this quarter was 0.89 MMT as compared to 0.77 MMT in the preceding quarter. Sales for quarter three FY ’24 was 0.687 MMT. On a nine monthly basis, petchem sales in the nine month FY ’25 was 2.407 MMT, it was more than the sales recorded in nine months of FY ’24, which was 2.245 MMT.
Now touching upon the borrowings. With respect to the borrowing levels, the borrowings as on 31st December ’24 has increased by about INR15,000 crores and is at INR1,31,480 crores as compared to INR1,16,490 crores as on 31st March 2024. If we compare, however, it has reduced by about INR11,000 crores from the previous quarter. The increase in borrowings was mainly fueled by LPG under recoveries, higher working capital. However, on a quarter-on-quarter basis, [Indecipherable] which was the decrease of INR11,000 crores was there because in the previous quarter, it was INR1,42,727 crores. The decrease is mainly attributable to increased accruals. With the current debt-to-equity ratio of 0.77 as at 31st December ’24, Indian Oil is comfortably placed to fund the ongoing capex plans.
With this, I will pause here and request Director of Finance to address any further remarks, any queries.
Anuj Jain — Director, Finance
No I think we can start the question and answers. We can take on the questions now. Yes, please.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Probal Sen
Thank you very much. Very good morning sir. Two or three questions. Firstly, as far as the Russian crude situation is concerned, just wanted a sense of how much percentage of our crude sourcing in Q3 was from Russian crude and at what discount to benchmark, if that can be shared? And what is the Q4 situation looking like at this point in time?
Anuj Jain
Okay. During the financial year ’24-’25, up to December, Russian crude oil import accounted for nearly 25% of IOC’s total crude oil imports. And the discounts we were getting up to December were in the range of benchmark crude minus 3. And — but now the discounts have come down in the range of benchmark crude minus 1 to 1.5.
Probal Sen
Got it. Got it. The second question, sir, is it possible to share the inventory impact in the marketing segment for this quarter?
Anuj Jain
See, we have the total impact for the — which we have suffered. I think I will share you the impact — with the total impact with you. Basically, if you compare quarter three to quarter three, the impact is on the account — last year, we had an inventory gain. This year, we have an inventory loss. So the incremental difference is INR7,800 crores.
Probal Sen
INR7,800 crores. So that is the swing from Q3 to Q3.
Anuj Jain
Yes. Yes.
Probal Sen
Okay. And third question was, sir, with respect to the expansion plans, which you mentioned about reaching 88 million in capacity on a capex of INR72,000 crores. Can you give a little bit of granularity, which plants are sought to be expanded and whether any petrochemical capacity will also be added alongside this refining capacity?
Anuj Jain
Yeah, I can share with that. See, as you know that Indian Oil has gone for expansion for three major refinery units, okay? We are adding 25% of our throughput capacity. The first one is the expansion in Panipat, where from 15 MMTPA, we are going to 25 MMTPA. This is INR38,000 crores project. And the expected completion is end of financial year ’25-’26. The second one which we are going for the expansion of our Gujarat refinery. It is almost a INR19,000 crore project. Scheduled completion date is again the last quarter of financial year ’25-’26. And the third expansion, what is going on is the Barauni refinery expansion, which is from 6 MMTPA to 9 MMTPA. This is also a INR14,800 crores project and the completion is underway as on date. It will also happen after a gap of between one or two years, yes. So these are the 3 major expansions happening in the refining capacities.
And the other thing what we are adding is, as you know that today, we have — our petrochemical intensity, we are focusing on. So the major product, what we are doing is today is — so basically, apart from the refinery expansion, even the petrochemical intensity will go up in all these projects. Okay. As far as the pure petrochemical units are concerned, we are at present going PFPT at Paradip. That is a INR13,800 crores of projects, and it is also expected to come in the next financial year. Then we have other projects like polypropylene plant at Barauni, Gujarat, Panipat. We have so many other projects coming in various units of Indian Oil. So a lot of capex being done. Last year, we’ve done a capex of almost INR40,000 crores. And this year, we plan to do a capex of INR35,000 crores.
Probal Sen
When we say this year that means FY ’25, the full year, right?
Anuj Jain
Yes, Financial year ’24-’25 yes. So we will be spending over INR35,000 crores.
Probal Sen
And how much have we spent in nine months sir?
Anuj Jain
We have almost spent INR28,000 crores up to December.
Probal Sen
Fantastic. Thank you so much, sir. Thank you so much. I’ll come back if I have more questions. Thank you so much.
Anuj Jain
Okay. Okay. Okay. Thank you.
Operator
Thank you very much. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Yogesh Patil
Thanks for taking my question sir. Sir, we wanted to more on the Russian crude side. Do we have any long-term oil sourcing contracts with the Russian supplier? And post these recent sanctions, what would be the impact on the contract? That’s one thing. And sir, what is the current crude sourcing arrangement? How much is the long term, short term? If you could share percentage terms, that would be helpful. That’s one.
Anuj Jain
See, I will share with you that — if you see in ’19-’20, we almost used to buy very negligible almost 0% crude from Russia. And it touched 21% after the crisis, we started taking 21% in ’22-’23. And ’23-’24, we touched almost 30%. And — but this year, April to December ’24, we have processed 25% Russian crude as on date. So this is a position of processing the Russian crude over the past five years, okay? So — and see, as far as we have been quite vocal in this that, see, Indian Oil has many markets to procure the crude oil, whether it is Middle East, Africa, America, Russia and many other markets are there. So we try to buy the crude from whichever market which gives us the cheapest. In ’19-’20, we never used to buy a single drop, but suddenly, we got up to 30%. Now if the scenario changes, we already have the markets. There’s no dearth of crude oil availability in the world. Only the commercial expects are to be seen at what discount we used to get the Russian crude before. If due to new sanctions, discount come up or the quantity comes down, we already have term contracts with various Middle Eastern countries through which we will be able to get enough crude for the company.
Yogesh Patil
Sir, let me quickly reframe the question. So my question was like that do we have any long-term oil sourcing contracts with the Russian supplier for the calendar year 2025? And post these sanctions, will it impact on our any long-term contract, if any? Yeah, that’s the question.
Anuj Jain
For financial year ’24-’25, we do not have any term contract with Russian — for Russian crude. So the second question does not — because we are not going to be get impacted.
Yogesh Patil
Perfect. Sir, second question from my side. As you just mentioned that Panipat, Koyali and Barauni refinery expansions will mechanically be ready by FY ’25-’26. But sir, our question is mostly on the commissioning. When it will get fully commissioned and it will start contributing to our profit and loss account statement, mostly on the EBITDA contribution. When can we expect? Will it be in FY ’27 or it will take much more time and it will be reflecting in FY ’28?
Anuj Jain
See, as on date, our commissioning target, I will tell you, for Panipat, commissioning is by December ’25, okay? But as you know, any new refinery will take some time to get stabilized. So the income — the first year, maybe 50% to 60%, suppose it comes in the December ’25. So ’25-’26 doesn’t happen anything. ’26-’27, definitely, the refinery will start. And normally, we have seen — the first year view at almost 50% to 60%. And 100% take minimum two years to achieve. Same is the case with the other things where for even the Gujarat refinery, it is expected to be commissioned in the last quarter of financial year ’25-’26. So some revenues will start coming in ’26-’27, but the full-blown income will start coming in ’27-’28.
Yogesh Patil
In case of Barauni, sir, commissioning expected in which quarter?
Anuj Jain
See Barauni expansion as on date, we are saying that it is going to again in the next financial year end. And although it may happen in stages, but definitely, all the three refineries are almost coming in the same fashion today.
Yogesh Patil
So the full contribution will most likely come in FY ’28. Is that a correct understanding?
Anuj Jain
No, I think so since it will be commissioned in next — last quarter of next financial year, maybe some crude input will be done in the last quarter. And yes, major input will be coming in ’26-’27.
Yogesh Patil
Thanks. Thanks a lot sir. This was really helpful.
Anuj Jain
Okay, thank you.
Operator
Thank you. The next question is from the line of Sumeet Rohra from Smartsun Capital Private Limited. Please go ahead.
Sumeet Rohra
Hi, Very good morning to you and your entire IOC team. It’s very nice of you to restart having these conference calls, and it’s very encouraging to have a chat with you. Sir, today, my questions are more to you as an investor rather than an analyst because I mean, we have several analysts who are going to ask you on cracks and throughput, etc.. So sir, I mean, I’m going to have a very candid conversation with you as an investor.
Sir, today, IOC is the third most valuable company in terms of sales in India, okay? But our market cap has now slipped down to Number 46. Now sir, clearly, from an investor point of view, this is absolutely unwarranted. And I also understand that our esteemed Oil Minister had a meeting with all the analysts and investors, and unfortunately, I couldn’t make it there because you’re obviously concerned on market cap. Sir, the first thing which I would like to highlight to you is today, sir, LPG under recovery of INR14,000 crores. I mean our profit is about INR5,500 crores. But sir, LPG under recovery is INR14,000 crores. Now sir, how — I mean, how can we ever get market cap? If we don’t get our earnings in order, I mean, today, if you adjust for the LPG, your earnings are, okay — INR19,000 crores, INR20,000 crores is very good. You would also have paid a good dividend by now. But today, you’ve not even paid dividend. So sir, this practice of this LPG under recovery of our — absorbing this is not giving a very sweet spot because today, we have lost a staggering INR95,000 crores in market cap. I mean, I repeat, sir, from the high to today, we have lost INR95,000 crores of market cap. Now sir, this is investors’ wealth, which is gone. And I mean, LPG prices were cut in March of last year. And the government is not paying till now, then sir, how is it going to benefit shareholders of public sector? I mean, just to give you a small example, public sector stocks have had the biggest bull run in India today. If you see over the last three, four years, I mean, stocks in defense, railways, I mean, they’ve gone up 10x, 15x, 20x.
Sir, The oil and gas space is completely absent in this entire rally because of policy uncertainty or earnings visibility. Sir, my humble request to you is we are a very valuable company. I mean we are the Number 3 company in sales in India. But sir, our market cap at INR1,70,000 crores surely does not deserve it from an investor angle. So sir, I would really request you that please have a look at some of these issues because you are doing extremely well in sales, you are doing extremely well in your throughputs, you’re doing extremely well. But sir, ultimately, as the investor, sir, we are concerned with market cap because we come to make return for our investors. But in spite of backing India’s best companies, if we don’t make return because of LPG under recovery, then sir, it is not doing justice to anyone’s cause. So sir, that’s my honest feedback to you is that, sir, please have a very serious candid look and please communicate this to the relevant authorities that this LPG under recovery is clouting earnings, it’s clouting dividend. The earnings visibility is not coming in because of which we are losing out. So my request is, sir, if you can get that issue addressed, it will go a long way in building our market cap. Just one thing, sir, today, our total asset is INR4,85,000 crores. I mean that is a staggering asset base we have, but market cap is one-third. So please, I humbly request you, sir, please have a look at this issue because this is something which will re-rate it. The budget is coming up now. It is a God given opportunity for you. Please have this issue addressed. That is my only request to you. Otherwise, sir, you are doing very well. I have nothing to tell you because you guys are a very superb management team in place. But sir, this LPG under recovery is something which is clouting us in a very, very bad way, sir. Thank you very much.
Anuj Jain
Thank you, Sumeet, for your guidance to us. I would say the only thing I would have heard you if you would have been in Mumbai when the Honorable Minister had the investors meet. He had —.
Sumeet Rohra
Unfortunately, I could not make it because it was only at a one day notice that we got the inquiry. But however, sir, I have tried to communicate this because, sir, today, I’ll be honest to you how our heart bleed. I mean when market caps of Indian Oil, Bharat Petroleum and Hindustan Petroleum at these prices is clearly not warranted. I mean, think about it, I mean, how can the three market caps of the three companies which supply 90% of India’s fuel be at INR3,00,000 [Phonetic] crores. I mean they’re absolutely unwarranted and it is being suppressed just because of this issue of LPG under recovery. Think about it, sir, if today LPG under recovery was not there, would these companies be trading at these market caps. So sir, by not paying the LPG under recovery, the biggest damage the government is doing is to itself. So I really — I’m astonished that why is this happening? Because sorry, I mean, it’s in front of your eyes, right? I mean we’ve not paid dividend till today. I mean your throughput may go up by 25%. But if your bottom line does not show that, it’s not going to really benefit from an investor point of view, right? Because see, you’re holding investor calls for investors, right? But sir, ultimately, I mean, this is something which you can handle. And I’m sure that the government — you guys go and explain to the government and say that we are minority investors and minority investors are suffering because of this, I’m sure they’ll figure away and everything will come back because Indian Oil doesn’t deserve this market. That’s my only request to you.
Anuj Jain
No, I will only say one thing that due to various government initiatives to provide LPG at affordable prices to masses, OMCs sell LPG at subsidized rates and thereafter seek reimbursement of these subsidies from government and this LPG is a controlled product. Ministry is doing their part — and in the — if you have seen in the past also, they have fully — against the INR28,000 crores under recovery, negative buffer, we were given INR22,000 crore subsidy by government to all the OMCs. And as we have discussed that day also, government is fully seized of this matter. And they have said that they are discussing this matter internally. And definitely, they are going to support oil marketing companies on this aspect. So I feel that it’s a timing difference. Yes, on a quarter-to-quarter basis, there may be wide variation. But if you see — you will see very soon that some good announcement will be coming and because government is seized of this matter. I cannot give anything absolutely on this regard, when it will come and how much. But definitely, the statement has been that the government is seized of this matter and definitely, subsidy will be given to OMCs.
Sumeet Rohra
So I mean, I will request you once again, sir, please, I mean, if this is the only thing which is basically affecting us. Otherwise, you guys are doing a splendid job. You are doing something which is exemplary. You have achieved excellent sales. You guys are doing a wonderful role for the country, for the people. But sir, also to do something for your investors and shareholders, yes. Because ultimately, sir, I mean, today, you see all the OMCs are available at –.
Anuj Jain
I will add only one thing. If you see the past 10 years’ return, I have given a return of almost — if you put together my capital appreciation and dividends, almost a return of 18% and the other major company in the oil and gas sector has also given 18%. So maybe on a quarter-to-quarter basis, my profitability gets affected. But if you see the long-term view about the company, our returns are not less than the other biggest oil and gas — private sector oil and gas company in the country. So I think I want to emphasize on this point that please, whenever you see a national oil company like Indian Oil, we have been rewarding the shareholders. Maybe on a quarter-to-quarter basis, we may not be able to give you the exact expected returns. But over the years, we have given reasonable dividend, reasonable capital appreciation, good bonuses from time to time to get a good returns to our stakeholders.
Sumeet Rohra
Yeah, sir, that point is absolutely taken, but your potential is to do much more. So if these issues are addressed, you can be a far, far more precious company in terms of market cap. That’s my only point which I want to highlight to you, sir.
Anuj Jain
I take this point very positively. Thank you very much.
Sumeet Rohra
Thank you sir. Thank you.
Anuj Jain
Thank you. Thank you.
Operator
Thank you very much. The next question is from the line of Vivekanand from Ambit Capital.. Please go ahead.
Vivekanand S.
Hello, thank you very much IOC team for doing this call. My two questions. One of them is on Terra Clean Limited. Your fiscal ’24 annual report mentions an investment plan of around INR5,000 crores for establishment of 1 gigawatt renewable capacity. But sir, your target by fiscal ’31 is 31 gigawatts. So could you give us some more details on the road map to get to 31 gigawatts by FY ’31 and the investment outlay needed? And thirdly, the business model on the renewable side? That is my first question. I’ll ask the second one after you answer this.
Anuj Jain
See, you are fully on track that we have a target of 31 gigawatts. But only thing is we have a mix of organic route to achieve that. We will be doing this capacity along with our JV partners also. And we will be also achieving this target through mergers and acquisitions. So we have multiple strategies to achieve this. And Terra Clean is 100% subsidiary company of Indian Oil, where the tender for 1 gigawatt is already out, okay? For another 4 gigawatt, work is in progress. We have also done a joint venture agreement with NTPC Green, and that is also going in a much faster way. So we have multiple strategies to achieve this target. And I’m only to say that once — see, today, if you see, every company is starting its journey. So we have already started this journey two years back, in fact. And we are on track to achieve our targets, both organically, inorganically, merger acquisition to JV companies in this manner. I can also share with you that a broad — I would say only broad numbers that 6 to 7 gigawatt would be done through our organic — another major portion will be coming through JV routes. First has already happened with NTPC. We have other MOUs signed by — with various renewable companies, and we are having a discussion with them. And another 5 to 6 gigawatts will be happening through mergers and acquisitions.
Vivekanand S.
Right. This is very helpful, sir. Is there any intermediate target, let’s say, next two years, three years in terms of capacity? Or if not, that’s also fine.
Anuj Jain
No, we have a target for the 31 gigawatts only.
Vivekanand S.
Okay. My second question is after these refinery expansions, you will be — on an overall network, you will be at 88 MMTPA at a group level and your marketing throughput — network throughput is around 92, 93 MMTPA. So will you be further undertaking refinery capex? Or is this the last stage of it?
Anuj Jain
See, as of now, these are the three major Board approved projects. But definitely, we will keep on scouting for any project if it gives me the desired returns, okay? You have seen other OMCs have also gone ahead with their new refineries. And we are also scouting for them, but only if we get the desired returns out of the new investments. But as on date, these are the 3 major expansions happening in the company.
Vivekanand S.
Right? Thank you very much for the detailed answer and once again really appreciate you taking the time out to do this call.
Anuj Jain
Thank you.
Operator
Thank you very much. The next question is from the line of S. Ramesh from Nirmal Bank Equities. Please go ahead.
S. Ramesh
Thank you very much. It’s a pleasure to listen to you and we would request you to continue this every quarter if you can. So the first thought is if you’re looking at your investments in refining and petrochemicals, what is your long-term target in terms of ROCE? And when do you think you will get a visibility on the improvement in refining margins and petrochemicals since you’re committing very large amount of capex. So if you can give your thoughts on that. And then I would also like to have some insight in terms of the progress you are expecting in the stand-alone CGD geographic areas and when you expect that capex to generate positive EBITDA?
Anuj Jain
I have just answered that question that — see, as far as refinery expansions are coming, part income will start coming from ’26-’27. And from ’27-’28, hopefully, the major income will start coming back to the company on our investments done this —.
S. Ramesh
Sir, I understand that. What I’m trying to look at is from the perspective of investors, it has to generate a certain ROCE, which you have been delivering in the last few years. So given the weak trends in margins, I would like to know what is your reading of when you get the kind of margins required to generate, say, 12% to 15% ROCE. That’s what one is trying to understand.
Anuj Jain
See, it’s very difficult to predict the margins as such. Everybody knows that. See, but once you can see over a long-term basis, refinery cracks go up and down. You have seen how since past one year, the cracks have come down. So this is part and parcel of our industry where the margins sometimes go very high and sometimes the margins come down. So if you see even the HSD crack has vis-a-vis ’23-’24 is down by 50% in HSD itself. Same is the case with MS. Okay. But — so it keeps on fluctuating. Whenever we do any projects, we do a three year averaging five years, seven years. We see the five years. So it keeps an ups and down. But definitely, all the projects what company does definitely is a way above our cost of capital. So that is a basic strategy of the company. All these expansions should happen provided it gives me returns beyond my cost of capital. So I’m very optimistic that whenever these refineries will come, there will be sometime where the margins will not be very high. Sometimes the margins will be very high. But on a long-term basis, since there’s enough demand in the country, we should get reasonable returns on our investment.
S. Ramesh
Your thoughts on your CGD investments when you start seeing positive EBITDA? And you can also give us some insight around any plans to monetize any of your subsidiaries in green energy or the pipelines, that would be great.
Anuj Jain
See, I will say, IOC at present is having 26 GAs. And it is spread across the India. And we have also 49 GAs along with our joint venture companies. So we have a good exposure to the CGD business as on date. Our total capex will be on our GAs itself will be almost INR20,000 crores. See, now as far as the profitability of GAs are concerned, we expect that we will be becoming EBITDA positive in next financial year. Although the capex will be spent over the past many years, it is — the capex is going to continue from up to ’34, September ’34, but we will start becoming EBITDA positive from next year. And this is a growing business where we are focusing in a big way.
S. Ramesh
And any thoughts on monetizing your green energy subsidiary or pipelines or any other arm of your business?
Anuj Jain
See, it will be too premature to commit anything over a con call, but definitely, we have seen other companies monetizing their investments in the green portfolio after achieving a minimum size. So we are yet to achieve that size. So as soon as possible, we achieve that size, definitely, we would be seeing any opportunity in this regard. See, there are many things, there’s a dual taxation concept. So the GST issues. So many issues are there before we take on that. But definitely, it is one of the long-term strategy for our company.
S. Ramesh
This is the last question. So in terms of the refinery modernization, can you give us a sense in terms of any residual — any benefits from residual upgradation? And any thoughts you have on your lube business?
Anuj Jain
See, lube business is one of the profitable business for any refining company. So we are — so like GA18 apart from the refining addition, it is also going to add my lubes LOB stock. So we are adding petchem, we are adding lubes in any other expansions. So there’s no definite answer to your query, but I would say any expansion which is happening is taking into account our additional need of base oils and additional feed for our petrochemical units.
S. Ramesh
And on any upside in gross refining margins from any bottoms upgradation you may be doing in your refinery expansion?
Anuj Jain
Yeah, yeah definitely. All the expansions are being done with the latest technology. So the refining margins will go up provided it is depending on the international cracks, which will prevail at that time.
S. Ramesh
So what is the yield improvement you can expect based on the bottoms upgradation from the current yield?
Anuj Jain
See, if you see the Panipat, okay, my yield upgradation is definitely going to happen. I can give you the data subsequent to that.
S. Ramesh
Okay sir, thank you very much and wish you all the best. Thank you.
Anuj Jain
Okay, thank you.
Operator
Thank you very much. [Operator Instructions] Next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Amit Murarka
Yeah, hi, good morning. So I just wanted to check, firstly, what was the marketing inventory loss in three months and nine months, if you can provide?
Anuj Jain
We have already — I have shared in the beginning itself, the total — the Q3, the inventory losses put together, both crude and marketing were in the range of INR5,200 crores.
Amit Murarka
Sure. And nine months, if you could provide?
Anuj Jain
Nine months is almost INR5,500 crores.
Amit Murarka
Got it. And sorry, I joined the call a little late. Have you also provided the capex for ’25 and ’26?
Anuj Jain
Yes, I have shared my capex for ’25-’26. INR33,000 crores. So the capex would be INR33,000 crores.
Amit Murarka
In ’26, FY ’26.
Anuj Jain
Yeah. Next year.
Amit Murarka
Sure. Also, I think on petchem side, I think some discussion has already happened. But just checking like given that there is so much of, I mean, drag in the spreads that you are seeing for quite some time and it seems more structural now, have you given any thought when you’re kind of evaluating petchem expansions in your new refineries? What kind of assumptions you’re doing like taking when you build in IRR for such projects? I just wanted to understand that as well.
Anuj Jain
See, we understand that petchem margin is a cyclical trend, okay? But one thing is for sure that there’s a huge demand in India. A lot of imports are happening in India. Petchem sector is expected to grow by 11% to 12% per annum, okay? Today, it is a INR51 billion in ’21. It will become double INR200 billion in ’27. And by 2040, it is expected to touch INR400 billion. So there’s a huge potential of petrochemicals in the country. A lot of imports are happening. So definitely, we are going to — we are investing a lot of our capex in petchem cycle, and we hope that there may be some cycles where the earnings will be come down. But definitely, from time to time in the past, we have seen we get a reasonable good margins in petchem. So this is a long-term strategy of the company.
Amit Murarka
Got it. No, I agree with you on the demand side. I was only wondering that simply because like we are doing naphtha-based petchem, which frankly is a higher cost feedstock now compared to ethane. So is there any kind of longer term — what kind of assumptions you are taking basically on the spreads simply because it’s also a structural issue, while it is cyclical, but the ethane to naphtha is a structural issue. So I mean, I’m not so sure of the other recovery of margins going back to older levels. So I just wanted to understand, therefore that, what kind of assumptions you are taking when you’re doing IRR for these projects?
Anuj Jain
See, if you understand, we have 10 refineries, and we have a lot of excess naphtha in our system. So instead of exporting it, it is much better to use that naphtha to have a naphtha-based cracker in our system. Okay. So — but we are not averse to have an alternate cracking also like ethane-based or we have — that can also be done. But for us, for a refining company, naphtha-based — naphtha crack is a very good option with us actually.
Amit Murarka
Okay. Okay. Sure. Yeah. Thank you.
Anuj Jain
Thank you.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Vikash Jain from CLSA. Please go ahead.
Vikash Jain
Hi sir, thanks for taking my question. This is coming back to Russian crude. So the question was, after these sanctions, you did mention that nine months — you have 25% of the crude intake is Russian crude. After this sanction in FY ’26, do you — where do you see this number settling down? Could it be far lower? Could it be sub-10% kind of Russian crude based on whatever you can see at this point of time?
Anuj Jain
See, it will be very difficult to give any specific percentage. But one thing is what we are witnessing is we are getting the impact as on date because of the new sanctions. But it takes time. Whenever the new sanctions come, it takes some time for the entire oil and gas industry to stabilize. So if you ask me today in Jan ’25, whether I got impacted, I would say yes. But definitely, I had a past contract. So for Jan and Feb, we have a reasonable intake. For the month of March, yes, whatever I thought it is not going to come in the same quantity. But what will happen in the April, May, June onwards, we feel that — because as such, Russian crude is not sanctioned. If you see only the entities, two entities have been sanctioned and a few vessels have been sanctioned. So as such, there is no total demand on the Russian crude. So we expect — and we are expecting that Russian crude is going to come. But definitely, we will only buy if it comes at a reasonable discount to us vis-a-vis my other procurement because whenever we procure Russian crude, it is coming in the small-sized vessels. And whenever we buy crude from Middle East or others, it is coming in a very VLCC sort of tankers. So the freight advantage is sometimes overweigh by other discounts. So we will see on a month-to-month basis, how we will be able to buy it.
Vikash Jain
So sir, when we say — I think the discount right now is about $3 or so, right? So that is a landed discount adjusted for the fact that you are using a less efficient vessel and all of those things. That’s the landed. That is when we say $3 or so discount, that’s what is landed in India, right? Is that the broad — that’s — we are comparing it to landed basis, right?
Anuj Jain
But even the $3 has come down to $2 now.
Vikash Jain
Okay. And so if you were to adjust for the quality, anyway Russian crude required needs to be at a discount or used to be at a discount, say, before at about $1, $1.5, right? So I mean, if it comes down to sub-$2, then automatically it becomes less attractive. Isn’t that the case?
Anuj Jain
See, we have a very, very robust, I think, biggest optimization package in Indian Oil, where we have configured 10 refineries, 30,000 kilometers worth of pipelines, all other marketing installations, what they can produce, when to produce, what is the demand, from where the product will come, at what price, what tank, DAP, FOB. So we have all the factors we factor in. And we have a very good optimization package, which comes out what is the most optimum crude to be bought at what time. So whether it is X, Y, Z, all crudes for us are equal. Some quality parameters will be different. So it will get an advantage in our package. If it is not having a good quality, it will, in any case, get valued accordingly. So it’s a very detailed exercise what we are doing day in, day out.
Vikash Jain
Sure, sure. Okay sir. Thank you.
Anuj Jain
Thank you.
Operator
Ladies and gentlemen, that was the last question for today’s call. I now hand the conference over to the management for closing comments.
R V N Vishweshwar
Yeah, thank you, everyone. Thank you to all the investors and analysts for joining the call. We thank everyone.
Anuj Jain
I also want to thank everyone. I will say that despite the global headwinds inflicted by global inflation, ongoing Russia, Ukraine conflict, weakness in other major economies and the US Presidential elections weakening domestic currency against US, Indian Oil has still performed exceptionally stood tall and given reasonable good results, quarter three despite facing inventory losses and exchange losses in the quarter three. Thank you. I will end my briefing here. Thank you.
Operator
[Operator Closing Remarks]