Bharat Petroleum Corporation Ltd.
Investor Presentation
November 2018 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 6th largest company by turnover over INR 2,772 bn in MMT FY18 and INR 2,420 bn in FY17 FY18 41.2 FY17 37.7 • India’s 2nd largest Oil Marketing Company (OMC) with FY16 36.5 domestic sales volume of over 41.21 MMT in FY18 and 37.68 FY15 34.5
MMT in FY17 FY14 34.0 Market Sales Market 0 5 10 15 20 25 30 35 40 45 − Domestic market share of 21% during FY18
• Majority Govt. of India shareholding of 53.93% and explicit Govt. support through under-recovery compensation mechanism MMT
• # 314 ranking on Fortune 2018 global list; ranks 6th among the only seven Indian companies on the list 36.5 36.5 30.5 30.5 30.5 • The Govt. of India conferred BPCL with “MAHARATNA” status
in Sep 2017 Refining Refining Capacity FY15 FY16 FY17 FY18 H1FY19 • Well positioned to meet market demand across India through INR bn 939.79 927.25 Strategically located Refineries and Marketing Infrastructure 811.61 653.9 • Successful foray into upstream business. 586.3
• Ratings at par with the Sovereign
− Baa2 (Outlook Positive) by Moody’s / BBB- (Outlook
Stable) by Fitch FY15 FY16 FY17 FY18 H1FY19 Market Capitalization^ Market ^ Market capitalization figures as on period end FY means Financial year ending 31st March Source: National Stock Exchange India’s Leading Oil and Gas Company with presence across the Hydrocarbon Value Chain 5 Important Milestones
GoI acquired Burmah BPCL and GAIL BPCL entered the LNG MR capacity enhanced to Kochi CCR1 unit at Formation of Shell Refineries. Name formed a JV, market by signing a gas 12 MMTPA. Refinery Mumbai Bharat Gas changed to BPCL in IGL, for sales purchase BPCL and Videocon JV capacity Refinery Resources 1977 distribution of agreement with Petronet enhanced commission 2018 acquired 50% stake in Limited for Natural Gas in LNG Brazil's EnCana to 9.5 ed in March focus on Gas entire capital Brasil Petroleo MMTPA 2014 2017 region business 2016
2015 2014
2012
2011 Acquisition of conferred with upstream “MAHARATNA” 2009 assets in status in Sep 2008 Russia 2017 2007 2006 Integrated 2003 Refinery 2002 Expansion 1976 1998 Project (IREP) at Kochi
Started operations at its Refrigerated Commissioned Energy Bina refinery by launching LPG storage Efficient CDU IV with and handling replacement of CDU I & II Entered into its crude distillation unit facility at at Mumbai Refinery upstream business Commissioning of Restructured business into JNPT and First in the Indian and formed Bharat Euro III / IV products 6 MMTPA Commissioned Kota Jobner corporate centre, Strategic Uran LPG Oil Industry to roll Petro Resources launched at Mumbai and Bina Refinery Pipeline and Terminal Business Units (SBU) and plant out ERP Solution Limited (BPRL) Kochi Refinery Shared Entities commissioned
6 Major Subsidiaries/ JVs
Subsidiaries Joint Ventures & Associates
City Gas Aviation Upstream Refining Refining Pipelines Trading Activities Distribution Services
100.00% 61.65% 50.00% 50.00% 22.50% 50.00% 50.00% Kochi Salem Bharat Stars Bharat Oman Indraprastha Gas Matrix Bharat Pipeline Pvt. Services Pvt Refineries Limited Limited Pte Limited Limited Limited
25.00% 25.00% 11.00% 37.00% Bharat Numaligarh Ratnagiri Refinery Delhi Aviation PetroResources Central UP Gas GSPL India Refinery Limited & Petrochemicals Fuel Facility (P) LNG Limited Limited Transco Limited Limited 12.50% 22.50% 11.00% 21.68% Maharashtra Kannur GSPL India Petronet LNG Natural Gas International Aviation Gasnet Limited Gas Limited Airport Ltd. Services 49.94% 25.00% 100.00% 74.00% Mumbai Aviation Bharat Gas BPCL-KIAL Fuel Sabarmati Gas Others Fuel Facility (P) Resources Farm Facility Pvt. Limited Limited Ltd. Limited 20.73% 50.00%
Haridwar Natural FINO Paytech Ltd Gas Private Limited 7 50.00% 7 Goa Natural Gas Pvt. Ltd. 2. Business Overview
Credit Highlights
8 Diversified Product Offering and Presence Across Value Chain
Industrial/ RefineryAviation Retail LPG Aviation Lubricants Gas Commercial
Refining capacity 26.3% market 26.6% market Currently 8,000+ 25.2% market 16.3% market 50+ major LNG of 36.5 MMTPA share1 share1 customers share1 in ATF share1 customers 15% of the 14,565 retail Currently 5,422 43 Aviation Currently 16,000 country’s outlets distributors service stations customers refining capacity 115 depots and 51 LPG bottling More than 1000+ 13 installations plants grades of products
Strategically Pan India Various Reliable, Present at all Major OEM tie Emerging located presence across Innovative innovative and the major ups such as Markets refineries products offerings with caring supplier gateways and Tata Motors, ventures in of I&C products airports for into Honda, Genuine allied business plane services Oil, TVS etc.
100% subsidiary Four refineries Pioneer in Current Pioneer in IT Only OMC to Product BGRL for focus in Mumbai, branded retail customer base integration and implement customization on Gas business Kochi, outlets, branded of 68mn incl. Supply Chain “Apron Fuel City gas Numaligarh and fuels ex: Speed retail and bulk Management Management distribution Bina System” networks in 10 cities + 11 new GAs
1. Market share includes sale by PSU as well as private oil marketing companies. All figures as of 30th September 2018 2. Source : Ministry of Petroleum and Natural Gas. 9 Refining Coverage
Installed Capacity Refining Throughput Refining Capacity 40.00 31.25* 29.84* 28.55 * 28.69* 29.24* 3.35 Mumbai – 240 kbpd 30.00 3.18 2.81 2.73 3.10 3.20 2.68 2.61 2.78 2.52 14.29 20.00 13.60 13.03 12.96 13.41 Kochi – 310 kbpd 10.00 1 1 .7 9 1 4 .2 5 1 0 .3 2 1 0 .4 0 1 0 .7 1 - BORL – 120 kbpd FY14 FY15 FY16 FY17 FY18 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
10 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 FY17
. Low cost capacity expansion from 6 MMTPA to 7.8 MMTPA Kochi Refinery . GRM of $11.4/bbl during Q2FY19 and $11.7/bbl during FY18
Pipelines :
Bina refinery to consolidate refining portfolio required to support downstream retailing market in Northern India
11 Marketing Operations and Efficiencies
SBU Market Sales (MMT) Retail Market Share of MS & HSD *
42.00 41.21 36.53 37.68 37.00 34.00 34.45 32.00 Retail 27.00 Lubes . MS > 26.32% 22.00 Direct 17.00 Aviation . HSD > 26.46% 12.00 LPG 7.00 2.00 (3.00) FY14 FY15 FY16 FY17 FY18
LPG Bottling Plant Capacity (TMTPA) Thru’put per Outlet BPC Vs. Industry (KL/month)
250 3957 225 3900 189 3687 200 162 3700 157 164 175 3500 3363 150
3300 Capacity 125 3075 3075 H1FY19 3100 100 75 2900 50 2700 25 2500 0 FY14 FY15 FY16 FY17 FY18 BPC IOC HPC Industry * Market share includes sale by PSU as well as private oil marketing companies during H1FY19 Leading Player with a Diversified product portfolio and a well-established Marketing and Distribution network 12 Efficient Marketing Operations and Infrastructure
Continuous innovation to extend customer focus and improve operational and financial efficiency.
Retail Initiatives Brand and Customer Loyalty Launched the first branded fuel in India i.e. Speed Over 8,000 Automated Outlets, Generating over 75% Pure for Sure (PFS) of total retail sales volume – Pioneer program guaranteeing fuel Quality In and Out Stores : 157 convenience stores and Quantity Tie up with Amazon for “Pick Up” store initiative Loyalty programmes – One of the largest in India Highway Strategy–“GHAR”. The new growth engine – Petrocard – 0.50 mn customers – Chain of strategically located One Stop Truck Shops – Smartfleet – 0.27 mn customers (OSTS) – Dedicated fleet sales team Landmark Initiatives
New Business Initiatives Technology Initiatives
Smart Drive Mobile application for retail customers Unique integrated non-fuel strategy to enhance E business: e-biz.com/e banking (B2B) BPCL’s customer experience beyond fuel – 90% plus customers collections Bouquet of physical and digital non-fuel offerings to various customer segments – Online indenting/tracking – Rural Market Place (RMP) E business: e-bharatgas.com (B2B / B2C) – Integrated Fleet Management (IFM) – All India—All Customers (B2C) – Personal Travel Offerings (PTO) – Online refill booking/tracking (B2C) – Bulk customers direct order (B2B)
13 Ongoing projects – thriving to be self sufficient integrated source of fuel supply
Kochi Refinery – MS Block Project for Euro VI grade gasoline
Mumbai Refinery – Gasoline Hydro-treatment Unit
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
14 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
Bio-refinery at Bargarh
Polyol Project at Kochi
New facilities at Rasayani near Mumbai
More expansions in Upstream, Downstream business & Marketing network
15 Capex Strategy
Capital Expenditure
165.27 99.59 113.60 71.71 89.98
FY14 FY15 FY16 FY17 FY18 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
16 Improved Financial Performance
Net Worth (INR bn) Total Debt / EBITDA
341.52 356.51 1.5x 296.68 273.23 1.4x
1.3x 1.3x
FY16 FY17 FY18 H1FY19 FY16 FY17 FY18 H1FY19
EBITDA / Interest Total Debt / Equity
27.1x 22.7x 0.78x 0.68x 0.67x 17.6x 0.58x 11.7x
FY16 FY17 FY18 H1FY19 FY16 FY17 FY18 H1FY19
Stable Earnings and Sound Financial Leverage driving Credit Strength
17 Improved Financial Performance
PAT (INR Billion)/ Networth (%)
27.10 100.00 25.82 23.19 30.00 80.00 25.00 20.87 22.63 15.89 20.00 60.00 15.00 40.00 70.56 79.19 10.00 40.61 50.85 80.39 Networth %
20.00 26.43 5.00 Net Net Profit(Rs. bn) - 0.00 FY13 FY14 FY15 FY16 FY17 FY18
Profit after Tax (Rs. Bn) Networth %
Adjusted Debt-Equity Ratio (1) Adjusted Capital Employed (INR Billion) (1)
400 600 Net Worth Borrowings Capital employed 0.80 350 0.41 0.44 0.47 492 500 0.36 0.41 300 417 400 0.40 250 385 352 200 305 300 - 150 FY15 FY16 FY17 FY18 H1FY19 200 100 100 Debt: Equity ratio 50 - - (1) Adjusted for bonds outstanding as on period end FY14 FY15 FY16 FY17 FY18
Stable Earnings and Sound Financial Leverage driving Credit Strength
18 BPRL’s Upstream Story over the years…….
2018 2017 2016 2015
2013
2012
Entry in Lower 2011 Declaration of Zakum Russian Commerciality 22 Acquisition approved in discoveries Operatorship 2010 (cumulative) Indonesia Schedule B block entry Lead operator 2009 Joint operator
Shale gas 2008 entry Australia NELP VI (5 blocks) Brazil 2007 & Mozambique acquisition 2006 Formation of BPRL
2003 Formation of E&P setup in BPCL Upstream Global Spread
BPCL through its subsidiary BPRL has Participating Interests in 22 blocks across 6 countries and Equity Participation in Vankor and Taas in Russia −Estimated recoverable reserves of about 75 TCF till date in Rovuma basin (Mozambique) −Production 20 MMTPA by Vankor (currently at peak) and 1.2 MMTPA by Taas
2 TAAS 9.86% Russia# 26 Exploration Discoveries 2 Vankorneft 7.88% Country Nos Name of Block PI%
Block in Appraisal stage
Producing Blocks
3 Cauvery Basin 20 % - 100% 3 Rajasthan 33.3, 100% India 2 Cambay 25% 1 Assam-Arakan 20%
3 Mumbai Basin 20,100%
Indonesia 1 Nunukan 12.5%
1 BM-C-30 12.5% East Timor 1 JPDA 06/103 20% Brazil* 3 BM-SEAL-11 20% Mozambique 1 Area 1 Offshore 10% 2 BM-POT-16 10%
Discovery location Israel 1 Block 32 25%
* Held through 50-50 JV with Videocon Ind. Australia 1 EP413 28% # Held through SPVs with OIL & IOCL UAE^ 1 Lower Zakum 3% ^ Held through SPV with ONGC Viesh and IOCL Global Upstream Footprint
Partnership with established Oil and Gas operators expected to generate optimal returns for BPCL.
Within India Brazil Australia and East Timor BPCL BPCL BPCL Exploration Block Operator Partners Exploration Block Operator Partners Exploration Block Operator Partners Stake Stake Stake1 GSPC, NELP—IV BM-SEAL-11 Petrobras 20.0% Videocon Videocon, CY/ONN/2002/2 ONGC 40.0% ONGC (3 blocks) Japan Videocon, JPDA 06-103 Oilex 20.0% NELP—VI BM-C-30 Energy, Pan Anadarko 12.5% BP and CY/ONN/2004/2 ONGC 20.0% ONGC (1 block) Pacific Maersk NELP—VII Petroleum BM-POT-16 Videocon, Petrobras 10.0% Norwest RJ/ONN/2005/1 HOEC, BPRL 33.33% IMC (2 blocks) Petrogal, BP EP-413 27.8% ARC Energy Energy NELP—IX GAIL, EIL, BIFL, Mozambique Russia CB/ONN/2010/11 25.0% BPRL MIEL BPCL BPCL Exploration Block Operator Partners Exploration Block Operator Partners AA/ONN/2010/3 OIL 20.0% ONGC Stake Stake BPRL, EIL, BIFL, PTTEP, Rosneft, CB-ONN-2010/8 25.0% Vankor GAIL MIEL Mozambique Mitsui and Vankorneft 7.89%2 OIL, IOCL, Anadarko 10.0% (2 Blocks) Rovuma Basin Co., ENH, MB-OSN-2010/2 OIL 20.0% HPCL OVL OVL-OIL DSF 2016 Srednebotuobins Rosneft, BP, koe TYNGD 9.87%3 5 Blocks BPRL 100.0% - OIL, IOCL United Arab Emirates (2 Blocks) OALP-I BPRL 100.0% - BPCL Indonesia Exploration Block Operator Partners Israel Stake4 BPCL BPCL Exploration Block Operator Partners CNPC, Exploration Block Operator Partners Stake INPEX, ENI, Stake Nunukan PSC, Videocon Lower Zakum ADNOC 3% ONGC Pertamina 12.5% TOTAL, Block 32 25% IOCL, OIL Tarakan Basin Industries OVL, IOCL Videsh
1. BPCL’s effective stake held through 50:50 JV with Videocon. 2. BPCL’s effective stake held through its 33% stake in the JV with Oil India and Indian Oil for the 23.9% stake acquisition of JSC Vankorneft (Vankor) 3. BPCL’s effective stake held through its 33% stake in the JV with Oil India and Indian Oil for the 29.9% stake acquisition of Tass-Yuryakh Neftegazodobycha (TYNGD) 4. BPCL’s effective21 stake held through SPV with ONGC Videsh & IOCL Highly Experienced Management Team
Mr. D Rajkumar, Chairman & Managing Director 32 years of experience, out of which almost 15 years of board experience as MD of BPCL’s JV and subsidiary companies Has experience in marketing, to pipeline projects and across the integrated upstream and downstream oil sector
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. K Padmakar , Director Human Resources Over 33 years of experience with BPCL He has had experience across HR and ERP functions
Mr. Arun Kumar Singh, Director Marketing • Over 33 years of industry experience in Oil Marketing • Director on Boards of Indraprastha Gas Ltd. and Bharat Gas Resources Ltd. • Prior to his taking over as Director (Marketing), he headed many internal functions/departments, namely, President, BPRL, Pipelines, Supply Chain Optimization, Retail Business Unit, LPG Business Unit, Central Procurement Organization etc.
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 – Attractive Industry Dynamics
Significant potential for domestic O&G companies given low per-capita oil consumption and growing demand.
Per Capita Oil Consumption India Oil Demand bbl/day per 1,000 People Million Tonnes
India 3 81.1 FY18 26.2
China 9 23.3
76.0 Brazil 15 FY17 23.8 21.5 Russia 22
74.6 UK 24 FY16 21.8 19.0 Germany 29 69.3
Australia 42 FY15 19.1 17.6
US 60 68.4 FY14 17.1 Singapore 242 16.3
Diesel Petrol LPG
Source: Oil Consumption from BP Statistical Review 2016,Population from World Bank, Estimates 2015 Source: Central Statistics Office / PPAC
24 Indian Oil Industry
Compensation of Under Recoveries
• Prices of retail sales of LPG and PDS Kerosene Oil are capped by the Government of India (GoI)
• 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 • Petrol Prices De-regulated completely % Sharing of Under Recoveries by OMCs • Gasoil (Retail) – Deregulation announced effective 19th 3.0% October 2014
• Gasoil – Bulk sales completely deregulated since January 2013 1.5%
• Restricted supply/Targeted subsidies for cooking fuel 0.6% products
• LPG DBTL scheme - Domestic LPG fully enrolled FY13 FY14 FY15 • SKO PDS DBTK scheme – launched on pilot basis in 4 Under-recoveries borne by OMCs have been NIL since FY16 districts and now implemented in the state of Jharkhand
Strategic position in the Indian economy with way to deregulation of fuel sector in the country
25 Thank You