Bharat Petroleum Corporation Ltd.
Investor Presentation
September 2016 Disclaimer
No information contained herein has been verified for truthfulness completeness, accuracy, reliability or otherwise whatsoever by anyone. While the Company will use reasonable efforts to provide reliable information through this presentation, no representation or warranty (express or implied) of any nature is made nor is any responsibility or liability of any kind accepted by the Company or its directors or employees, with respect to the truthfulness, completeness, accuracy or reliability or otherwise whatsoever of any information, projection, representation or warranty (expressed or implied) or omissions in this presentation. Neither the Company nor anyone else accepts any liability whatsoever for any loss, howsoever, arising from use or reliance on this presentation or its contents or otherwise arising in connection therewith.
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The information in this presentation is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the Company. We do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date of this presentation or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.
2 Table of Contents
1. Corporate Overview 4
2 Business Overview 9
3. Industry Overview 23
3 1. Corporate Overview
Credit Highlights
4 Introduction
• India’s 3rd largest company by turnover over INR 1,891 bn in FY16 MMT
and INR 2,379 bn in FY15 FY16 36.5 • India’s 2nd largest Oil Marketing Company (OMC) with domestic FY15 34.5 sales volume of over 36.53 MMT in FY16 and 34.45 MMT in FY15 FY14 34.0
− Domestic market share of 21% during FY16 FY 13 33.3 Market Sales Market • Majority Govt. of India shareholding of 54.93% and explicit Govt. FY 12 31.1 support through under-recovery compensation mechanism
• # 358 ranking on Fortune 2015 global list; ranks 5th among the only
MMT seven Indian companies on the list
• Well positioned to meet market demand across India through Strategically located Refineries and Marketing Infrastructure 30.5 30.5 30.5 30.5 30.5 • India’s only OMC with a successful foray into upstream business (1). BPCL through its subsidiary BPRL has Participating Interests
in 17 blocks across 6 countries Refining Capacity Refining FY12 FY13 FY14 FY15 FY16 − Estimated recoverable reserves of about 75 TCF till date in Rovuma basin (Mozambique) INR bn − Estimated resources of 200+ MMBOE(2) till date in Wahoo 653.9 basin (Brazil) 586.3
• Ratings at par with the Sovereign 332.8 253.16 273.11 − Baa3 (Outlook Positive) by Moody’s / BBB- (Outlook Stable) by Fitch
(1) Also reflected in consistently improving market capitalization (2) Wood Mackenzie, Company reports Capitalization^ Market FY12 FY13 FY14 FY15 FY16 MMBOE - Million barrels of oil equivalent TCF- Trillion cubic feet of gas Source: National Stock Exchange ^ Market capitalization figures as on period end FY means Financial year ending 31st March India’s Leading Oil and Gas Company with presence across the Hydrocarbon Value Chain 5 Important Milestones
Kochi Refinery capacity enhanced to 9.5 BPCL entered the LNG market GoI acquired Burmah Shell MMTPA by signing a gas sales MR capacity enhanced to Refineries. Name changed to purchase agreement with 12 MMTPA. BPCL in 1977 Petronet LNG BPCL & Videocon JV acquired 50% stake in CCR unit at Brazil's EnCana Brasil Mumbai Petroleo Refinery BPCL and GAIL commissione formed a JV, IGL, for d in March 2015 distribution of Natural 2014 Gas in entire capital region 2014
2012 - Commissioned Energy Efficient CDU IV with 2011 replacement of CDU I & II at Mumbai Refinery - Commissioned Kota 2009 Jobner Pipeline and 2008 Terminal 2007 2006 2003 2002 1976 1998
2012: Started operations at its Refrigerated Bina refinery by launching Commissioning of LPG storage its crude distillation unit 6 MMTPA and handling grassroot Bina Entered into facility at Refinery upstream business Euro III / IV products JNPT & Uran Restructured business into First in the Indian and formed Bharat launched at Mumbai and LPG plant corporate centre, Strategic Oil Industry to roll Petro Resources Kochi Refinery commissioned Business Units (SBU) and out ERP Solution Limited (BPRL) Shared Entities. 6 Major Subsidiaries/ JVs
BHARAT PETROLEUM CORPORATION LIMITED
Subsidiaries Joint Ventures
Bharat PetroResources Ltd. Refining Bharat Oman Refineries Limited 50.00% 100% Indraprastha Gas Limited 22.50% Central UP Gas Limited 25.00% City Gas Distribution Numaligarh Refinery Ltd. Maharashtra Natural Gas Limited 22.50% Sabarmati Gas Limited 49.90% 61.65% LNG Petronet LNG Limited 12.50% Trading Acitivities Matrix Bharat Pte .Ltd. 50.00% Petronet CCK Limited. Bharat Stars Services Pvt. Ltd. 50.00% Delhi Aviation Fuel Facility Pvt. Ltd. 37.00% Aviation Services 99.96% Kannur International Airport Ltd 21.68% Mumbai Aviaiton Fuel Farm Private Limited 25.00% GSPL India Gasnet Ltd 11.00% BPC-KIAL Fuel Farm Facility Pipelines GSPL India Transco Ltd 11.00% Limited – 74.00% Kochi Salem Pipeline Private Limited 50.00%
7 Key Business Verticals
Industrial / RefineryAviation Retail Upstream Gas Lubricants LPG Aviation Commercial
18.4% market 25.7% market Refining 26.7% market PI in 17 oil & Currently 54 Currently share* share* 23.4% market capacity of share* gas blocks major LNG 7,000 Currently Currently share* in ATF 30.5MMTPA 13,501 retail 7 blocks in customers customers 16,000 4,494 13% of the outlets India and 10 40 Aviation customers distributors country’s 118 depots and overseas service More than 50 LPG stations refining 13 installations 1000+ grades of (1) bottling plants capacity products
Strategically Pan India Global Emerging Reliable, Major OEM Various Present at all located presence spread into Markets innovative tie ups such Innovative the major refineries across pure play and caring as Tata offerings gateways & products Exploration supplier of Motors, with ventures airports for I&C products Honda, in allied into plane Genuine Oil, business services TVS etc
Four Pioneer in Only Indian One JV in LNG Pioneer in IT Product Current Only OMC to and 5 city gas refineries in branded OMC to have integration customization customer implement Mumbai, distribution retail outlets, made JV’s and Supply base of 51 “Apron Fuel Kochi, branded significant 4 new CGDs Chain mn incl. retail Management Numaligarh fuels ex: discoveries on standalone Management and bulk System” and Bina Speed basis
(1) Source : Ministry of Petroleum and Natural Gas * Market share includes sale by PSU as well as private oil marketing companies. All figures as of 31st March 2016 8 2. Business Overview
Credit Highlights
9 BPRL’s Upstream Story over the years…….
2016 2015 2014 2013 2012 2011 Russian 22 Acquisition 2010 20 discoveries (yet to Schedule B discoveries (cum) close) 2009 Lead (cum) & Joint operator Reserve Appraisal operator certification Wells 2008 Shale gas entry Australia
2007 Indonesia entry Brazil & 2006 Mozambique acquisition NELP VI (5 blocks) 2003 Formation of BPRL
Formation of E&P setup in BPCL 10 Upstream Global Spread
`
Successful discoveries in Upstream to help BPCL achieve higher level of Vertical Integration
11 Global Upstream Footprint
Within India Brazil
Exploration Block Operator BPRL Stake Partners NELP - IV Exploration Block Operator BPRL Stake* Other Partners CY-ONN-2002/2 ONGC 40.0% BM-SEAL-11 NELP- VI Petrobras 20.0% Videocon (3 blocks) CY-ONN-2004/2 ONGC 20.0% BM-C-30 NELP - VII Anadarko 12.5% Videocon, BP, Maersk (1 block) RJ-ONN-2005/1 HOEC, BPRL 33.33% IMC BM-POT-16 Petrobras 10.0% Videocon, Petrogal, BP NELP - IX (2 blocks)
CB-ONN-2010/11 GAIL, BPRL 25.0% EIL, BIFL, MIEL * BPCL’s effective stake held through 50:50 JV with Videocon AA-ONN-2010/3 OIL 20.0% ONGC CB-ONN-2010/8 BPRL,GAIL 25.0% EIL, BIFL, MIEL Mozambique MB-OSN-2010/2 OIL 20.0% HPCL Exploration Block Operator BPCL Stake* Partners Mozambique Rovuma PTTEP, Mitsui & Co., ENH, Anadarko 10.0% Basin OVL-OIL
Australia & East Timor Indonesia Exploration Block Operator BPRL Stake Partners Exploration Block Operator BPCL Stake* Partners GSPC, Videocon, Japan Energy, Pan Nunukan PSC, JPDA 06-103 Oilex 20.0% Partamina 12.5% Videocon Industries Pacific Petroleum Tarakan Basin ARC EP-413 27.8% ARC Energy Energy
Partnership with established Oil & Gas operators expected to generate optimal returns for BPCL
12 Refining Coverage
Installed Capacity Refining Throughput Refining Capacity 29.84* 28.55 * 29.24* 30.00 28.69* 3.20 2.86 2.73 3.10 Mumbai – 240 kbpd 25.00 2.48 2.61 2.78 2.52 20.00 13.10 13.03 12.96 13.41 15.00 Kochi – 190 kbpd 10.00 10.71 5.00 10.11 10.32 10.40
BORL – 120 kbpd - FY 13 FY14 FY15 FY16
Kochi Mumbai Numaligarh Bina MMT Numaligarh – 60 kbpd
. Capacity Utilization consistently above global peers for KR and MR . State of the art refinery at Bina - High Nelson Complexity Index of 9.1
* Bina Refinery throughput is considered proportionately because it’s a 50:50 JV Four Strategically located Refinery Utilization rates 935-km cross country pipeline to refineries across India significantly above global peers source crude to BORL
13 Bina Refinery
. Bharat Oman Refineries Limited (BORL) –BPCL Interest 50% with 120,000 bpd (6 MMT) Refining capacity at BINA
. State of art technologies - High Nelson Complexity Index 9.1
NRL Refinery . Associated Facilities – SPM, Crude Oil Terminal, 935-km cross country crude oil pipeline from Vadinar to Bina (VBPL)
. Graded improvement in operations with the Mumbai Refinery Refinery operating at more than 100% of the design capacity during FY15
. Low cost capacity expansion from 6 MMTPA to 7.8 MMTPA Kochi Refinery
. GRM of $11.7/bbl during FY16 and $14.8/bbl during Q1FY17
Pipelines :
Bina refinery to consolidate refining portfolio required to support downstream retailing market in Northern India
14 Marketing Operations and Efficiencies
SBU Market Sales (MMT) Retail Market Share of MS & HSD * 34.45 36.53 35.00 33.30 34.00 31.14 30.00 25.00 Retail . MS > 27.20% Lubes 20.00 Direct HSD > 27.40 % 15.00 Aviation .
10.00 LPG
5.00
- FY12 FY13 FY14 FY15 FY16
LPG Bottling Plant Capacity (TMTPA) Thru’put per Outlet BPC Vs. Industry (KL)
250 3375 3400 225 187 3200 3075 3075 200 163 2990 2990 155 160 3000 175 150 2800 Capacity 125 2600 FY16 100 2400 75 2200 50
2000 25 FY12 FY13 FY14 FY15 FY16 0 BPC IOC HPC Industry * Market share includes sale by PSU as well as private oil marketing companies Apr-June2016 Leading Player with a Diversified product portfolio and a well-established Marketing and Distribution network 15 Marketing Expertise and Industry Pioneer Status
Retail Initiatives Brand & Customer Loyalty Programme Launched the first branded fuel in India i.e. Speed Over 6300 Automated Outlets, Generating over 75% of Pure for Sure (PFS) total retail sales volume − Pioneer program guaranteeing fuel Quality and In & Out Stores : 157 convenience stores Quantity Tie up with Amazon for “Pick Up” store initiative Loyalty programmes Highway Strategy - “GHAR”. The new growth engine − Petrocard – one of the largest loyalty programmes having 0.58 mn customers − Chain of strategically located One Stop Truck Shops (OSTS) − Smartfleet – 0.26 mn customers − Dedicated fleet sales team Landmark Initiatives
Technology Initiatives Other Key Initiatives
Smart Drive Mobile application for retails consumers First to implement ERP (SAP) for increase in efficiency business: e-biz.com/ e banking (B2B) First in the industry to start computerization in 1960’s − 90% plus customers collections Innovators in new business practices − Online indenting/tracking − Product-wise business structure adopted for greater E business: e-bharatgas.com (B2B / B2C) focus − All India – All Customers (B2C) − Off take agreement with subsidiaries and JV’s − Online refill booking/tracking (B2C) − Bulk customers direct order (B2B)
Continuous innovation to extend customer focus and improve operational and financial efficiency
16 Ongoing projects – thriving to be self sufficient integrated source of fuel supply
Integrated Refinery Expansion Project (IREP) at Kochi – Increasing refining capacity from 9.5 MMTPA to 15.5 MMTPA along with modernization of existing facilities to produce future quality fuels – Commissioning activities are underway
Mumbai Refinery – DHT Installation
Bina Refinery – Creeping Capacity Expansion from 6 MMTPA to 7.8 MMTPA
Investments in Gas pipelines – GIGL & GITL pipelines in Joint Venture
Kochi – Diversification into Niche Petrochemicals – Propylene Derivatives Petrochemical Project (PDDP)
Retail : Network expansion with infrastructure growth and upgradation
LPG import terminal at Haldia, West Bengal
Significant Expansion in Downstream & Marketing network to drive future growth
17 Upcoming projects
Funding for upstream developments and new assets
Refineries – Upgrade/ Expansion / De-bottlenecking
Investments in Gas
Expansion of marketing infrastructure across all business verticals
More expansions in Upstream, Downstream business & Marketing network
18 Capex Strategy
Capital Expenditure
113.60 99.59 61.25 71.71 36.05
FY12 FY13 FY14 FY15 FY16 Rs bn
Strategically expanding upstream activities through inorganic and organic growth opportunities
Investment in refining and distribution capacity to bridge the gap between sales volumes and production
Expand capacities and improve efficiencies at existing installation and refineries
Create opportunities with the manufacture of niche petrochemicals
Improve margin and value through facility upgrades
Significant Expansion in Upstream and Downstream business to drive future growth
19 Improved Financial Performance
Net Worth (INR bn) Total Debt / EBITDA
271.59
224.67 2.1x 194.59
1.3x 1.2x
FY14 FY15 FY16 FY14 FY15 FY16
EBITDA / Interest Total Debt / Equity
23.2x 1.0x 18.0x
0.6x 0.6x
7.0x
FY14 FY15 FY16 FY14 FY15 FY16
Stable Earnings and Sound Financial Leverage driving Credit Strength
20 Improved Financial Performance
PAT (INR Billion)/ Networth (%)
80.00 27.36 35.00 70.00 30.00 60.00 22.63 25.00 50.00 20.87 20.00 40.00 15.89 15.00 30.00 8.79 74.32 50.85 20.00 40.61 10.00 Networth % 26.43 Net Profit Net (Rs. bn) 5.00 10.00 13.11 - 0.00 FY12 FY13 FY14 FY15 FY16
Profit after Tax (Rs. Bn) Networth %
Adjusted Debt-Equity Ratio (1) Adjusted Capital Employed (INR Billion) (1)
400 380 1.60 1.12 353 352 1.14 320 1.20 0.81 0.36 0.40 300 305 0.80 200 0.40 - 100 FY12 FY13 FY14 FY15 FY16 - FY12 FY13 FY14 FY15 FY16 Debt: Equity ratio Net Worth Borrowings Capital employed (1) Adjusted for bonds outstanding as on period end
Stable Earnings and Sound Financial Leverage driving Credit Strength
21 Highly Experienced Management Team
Mr. S Varadarajan, Chairman & Managing Director Over 30 years of industry experience. He also holds the position of Chairman in Numaligarh Refinery Ltd., Bharat Oman Refineries Ltd. and Matrix Bharat Pte Ltd. & position of Director in Bharat PetroResources Ltd (BPRL) and Petronet LNG Limited (PLNG). He has been responsible for the overall Treasury Management, Risk Management, Corporate Accounts, Taxation and Budgeting. In addition to finance, he has handled marketing as head of sales for the retail business in southern region and also led the corporate strategy team
Mr. P Balasubramanian, Director (Finance) Over 30 years of industry experience. He also holds the position of Director in Bharat PetroResources Ltd (BPRL), Bharat Oman Refineries Ltd. (BORL) and of Chairman in Delhi Aviation Fuel Facilities Pvt. Ltd. and permanent invitee on the board of Numaligarh Refinery Ltd. He has been responsible for the entire Corporate Finance function including Corporate Treasury, Corporate Finance, Taxation, Investor Relations, Risk Management and overseeing the Corporate Governance structures.
Mr. S. Ramesh, Director Marketing Almost 36 years of industry experience. He also holds a position of Director on the Boards of our JV, Bharat Star Services Pvt. Ltd and Bharat Stars Services (Delhi) Pvt. Ltd. He has had the distinction of heading three major Business Units viz. Lubes, LPG and Retail apart from spearheading Brand, PR & New Initiatives in the Company
Mr. R. Ramachandran, Director Refineries Almost 34 years of industry experience He also holds the position of Director on the Board of Bharat Oman Refineries Ltd. and permanent invitee on the Board of Numaligarh Refinery Ltd. Prior to his current position, he held the post of Managing Director, Bharat Oman Refineries Ltd. Has varied experience in Refinery Operations, Product Planning, Technical Services, Project Conceptualization, Project Financing and setting up of grass root Refinery and Revamps.
Mr. S P Gathoo , Director Human Resources Over 26 years of experience with BPCL and prior to that worked with BHEL and NTPC Limited He also holds the position of Chairman in Petronet India Ltd and Petronet CCK Ltd. He has had experience across business vertical such as Lubricants, Business & Information Technology and HR function
The Senior Management team has in-depth Knowledge and Extensive Experience in the Oil and Gas industry
22 3. Industry Overview Corporate Overview
Credit Highlights
23 India - Oil and Gas Demand
Per Capita Oil Consumption India Oil Demand
India 3 74.6 FY16 21.8 19.0 China 7 69.3 FY15 19.1 Brazil 10 17.6
Russia 15 68.4 bbl/day per 1000 people FY14 17.1 16.3 Million Tonnes UK 26 69.2 FY13 15.7 Germany 31 15.6
Australia 44 64.8 FY12 15.0 15.4 US 61 60 FY11 14.2 Singapore 202 14.3
Diesel Petrol LPG
Source: CIA World Factbook, Central Statistics Office, Estimates 2012 Significant Potential for Domestic O&G Companies given the Low per-capita Oil Consumption and Growing demand.
24 Indian Oil Industry
Sharing of Under Recoveries
• Prices of retail sales of LPG and PDS Kerosene Oil are capped by the Government of India (GoI)
• Under-recoveries shared among GoI, the public sector OMCs and the public sector upstream companies (ONGC, OIL and GAIL)
• Under-recoveries determined and compensated provisionally by the GoI on quarterly basis
• Govt. has consistently compensated OMCs including BPCL for under recoveries and ensured reasonable profitability
Positive Policy actions % Sharing of Under Recoveries by OMCs
• Petrol Prices De-regulated completely 3.0% • Gasoil (Retail) – Deregulation announced effective 19th October 2014 1.5% • Gasoil – Bulk sales completely deregulated since January 2013 0.6% • Restricted supply/Targeted subsidies for cooking fuel products 0.0% 0.0%
• LPG DBTL scheme - Domestic LPG fully enrolled FY12 FY13 FY14 FY15 FY16
• SKO PDS DBTK scheme – To launch soon
Strategic position in the Indian economy with way to deregulation of fuel sector in the country
25 Thank You