Bharat Petroleum Corporation Ltd.
Investor Presentation
February 2017 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 5th largest company by turnover over INR 1,891 bn in FY16 MMT and INR 2,379 bn in FY15 9MFY17 28.4 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 FY 13 33.3 − Domestic market share of 21% during FY16
FY 12 31.1 Market Sales Market • Majority Govt. of India shareholding of 54.93% and explicit Govt. support through under-recovery compensation mechanism
th • # 358 ranking on Fortune 2016 global list; ranks 5 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 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 Refining Capacity FY12 FY13 FY14 FY15 FY16 9MFY17 − 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 basin (Brazil)
• Ratings at par with the Sovereign
− 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 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
GoI acquired Burmah BPCL and GAIL BPCL entered the LNG MR capacity enhanced to Kochi Refinery CCR1 unit at Shell Refineries. Name formed a JV, market by signing a gas 12 MMTPA. capacity Mumbai changed to BPCL in IGL, for sales purchase BPCL and Videocon JV enhanced Refinery 1977 distribution of agreement with Petronet acquired 50% stake in to 9.5 MMTPA commissioned in Natural Gas in LNG Brazil's EnCana March 2014 entire capital Brasil Petroleo region 2016
2015
2014
2012 Acquisition of upstream assets in 2011 Russia
2009 Integrated 2008 Refinery 2007 Expansion Project 2006 (IREP) at 2003 Kochi 2002 1976 1998
Commissioned Energy Efficient Started operations at its Refrigerated LPG CDU IV with Bina refinery by launching storage and replacement of CDU I handling facility at & II at Mumbai Entered into its crude distillation unit JNPT and Uran Refinery Restructured business into upstream business Commissioning of LPG plant Commissioned Kota corporate centre, Strategic First in the Indian and formed Bharat Euro III / IV products 6 MMTPA commissioned Jobner Pipeline and Business Units (SBU) and Oil Industry to roll Petro Resources launched at Mumbai and Bina Refinery Terminal Shared Entities out ERP Solution Limited (BPRL) Kochi Refinery
1. CCR: Continuous Catalytic Regeneration Reformer Unit. 6 Major Subsidiaries/ JVs
Subsidiaries Joint Ventures
City Gas Aviation Upstream Refining Refining Pipelines Trading Activities Distribution Services
100.00% 61.65% 50.00% 22.50% 50.00% 50.00% 50.00% Bharat Oman Kochi Salem Bharat Stars Indraprastha Gas Matrix Bharat Refineries Limited Pipeline Pvt. Services Pvt Limited Pte Limited Limited Limited
25.00% 11.00% 37.00% Bharat Numaligarh Delhi Aviation PetroResources Central UP Gas GSPL India Refinery Limited Fuel Facility (P) LNG Limited Limited Transco Limited 12.50% Aviation Pipelines 22.50% 11.00% 21.68% Services Maharashtra Kannur GSPL India Petronet LNG Natural Gas International 100% Gasnet Limited 74.00% Limited Airport Ltd. 16.00% 49.94% 25.00% BPC-KIAL Fuel Petronet India Mumbai Aviation Petronet CCK Farm Facility Sabarmati Gas Limited Fuel Facility (P) Limited Limited Limited Limited
50.00%
Haridwar Natural Gas Private Limited 7 7 Diversified Product Offering and Presence Across Value Chain
Industrial/ RefineryAviation Retail LPG Aviation Lubricants Gas Commercial
Refining capacity 26.7% market 25.9% market Currently 7,000 23.4% market 20.4% market Currently 54 of 30.5MMTPA share2 share2 customers share2 in ATF share2 major LNG 13% of the 13,700 retail Currently 4,618 40 Aviation Currently 16,000 customers country’s outlets distributors service stations customers refining capacity1 118 depots and 50 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.
Four refineries Pioneer in Current Pioneer in IT Only OMC to Product One JV in LNG in Mumbai, branded retail customer base integration and implement customization Kochi, outlets, branded of 51mn incl. Supply Chain “Apron Fuel City gas Numaligarh and fuels ex: Speed retail and bulk Management Management distribution Bina System” networks in 10 cities
1. Source : Ministry of Petroleum and Natural Gas. 2. Market share8 includes sale by PSU as well as private oil marketing companies. All figures as of 31st December 2016 2. Business Overview
Credit Highlights
9 BPRL’s Upstream Story over the years…….
2017 2016 2015 2013 2012 2011 Discoveries Russian notified in Operatorship 2010 22 Acquisition block Schedule B discoveries 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
2 TAAS 9.86% Russia# 2 Vankorneft 7.88% Country Nos Name of Block PI% 24 Exploration Discoveries
Block in Appraisal stage
Producing Blocks
2 Cauvery Basin 20 % - 40% 1 Rajasthan 33.3% India 2 Cambay 25% 1 Assam-Arakan 20% 1 Mumbai Basin 20%
Indonesia 1 Nunukan 12.5%
East Timor 1 JPDA 06/103 20%
Mozambique 1 Area 1 Offshore 10%
1 BM-C-30 12.5% Discovery Brazil* 3 BM-SEAL-11 20% location 2 BM-POT-16 10% Australia 1 EP413 28% * Held through 50-50 JV with Videocon Ind. # Held through SPVs with OIL & IOCL Global Upstream Footprint
Partnership with established Oil and Gas operators expected to generate optimal returns for BPCL.
Within India Brazil
Exploration Block Operator BPCL Stake Partners Exploration Block Operator BPCL Stake1 Partners NELP—IV BM-SEAL-11 Petrobras 20.0% Petrobras, Videocon CY/ONN/2002/2 ONGC 40.0% ONGC (3 blocks) BM-C-30 Videocon, NELP—VI Anadarko 12.5% (1 block) BP and Maersk CY/ONN/2004/2 ONGC 20.0% ONGC BM-POT-16 NELP—VII Petrobras 10.0% Videocon, Petrogal, BP (2 blocks) RJ/ONN/2005/1 HOEC, BPRL 33.33% HOEC, IMC NELP—IX CB/ONN/2010/11 GAIL, BPRL 25.0% GAIL, EIL, BIFL, MIEL Russia AA/ONN/2010/3 OIL 20.0% OIL, ONGC Exploration Block Operator BPCL Stake Partners CB-ONN-2010/8 BPRL,GAIL 25.0% GAIL, EIL, BIFL, MIEL Vankor Vankorneft 7.89%2 OIL, IOCL, OVL, Rosneft MB-OSN-2010/2 OIL 20.0% OIL, HPCL (2 Licenses) Srednebotuobinskoe TYNGD 9.87%3 OIL, IOCL, Rosneft, BP Mozambique (2 Licenses)
Exploration Block Operator BPCL Stake Partners Mozambique Anadarko, PTTEP, Mitsui and Anadarko 10.0% Rovuma Basin Co., ENH, OVL-OIL Australia and East Timor Indonesia Exploration Block Operator BPCL Stake Partners Oilex, GSPC, Videocon, Japan JPDA 06-103 Oilex 20.0% Exploration Block Operator BPCL Stake Partners Energy, Pan Pacific Petroleum Nunukan PSC, Pertamina, Videocon Norwest Pertamina 12.5% EP-413 27.8% Norwest Energy, AWE Tarakan Basin Industries Energy
1. BPCL’s effective stake held through 50:50 JV with Videocon. 2. BPCL’s effective12 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) BPRL – Successful acquisition of TYNGD and Vankor assets in Russia in 2016
. BPRL along with an Indian Consortium, TYNGD – Srednebotuobinskoe Field (2 Licenses) acquired: . BPRL effective interest: 9.87% - Participatory shares representing 29.9% of the . 2015 Oil Production: c.22 mbbl/d gross to the charter capital of TYNGD field; c.2.2 mbbl/d net to BPRL - 23.9% equity stake in Vankorneft - Gross production expected to increase to 100 . BPRL formed BISPL, a wholly owned subsidiary mbbl/d (c.9.9 mbbl/d net to BPRL) in the company in Singapore for enabling the above next 2-3 years mentioned acquisition . BISPL, with the above mentioned partners, through joint ventures formed two special purpose vehicles (SPVs) which holds the Vankorneft – Vankor Fields (2 Licenses) acquired stakes in the two Russian Assets . BPRL effective interest: 7.89% - Taas India Pte. Ltd. . 2015 Oil Production: c.440 mbbl/d gross to the - Vankor India Pte. Ltd. field; c.34.7 mbbl/d net to BPRL . BISPL holds 33% stakes in each of the two SPVs
13 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
14 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 $11.6/bbl during 9MFY17
Pipelines :
Bina refinery to consolidate refining portfolio required to support downstream retailing market in Northern India
15 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 > 27.10% Lubes 20.00 Direct HSD > 27.36% 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 3363 3400 225 187 200 163 3200 3075 3075 155 160 2990 2990 175 3000 150 2800 125 Capacity FY16 100 2600 75 2400 50 25 2200 0 2000 BPC IOC HPC Industry FY12 FY13 FY14 FY15 FY16 * Market share includes sale by PSU as well as private oil marketing companies Apr-Dec 2016 Leading Player with a Diversified product portfolio and a well-established Marketing and Distribution network 16 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 – 0.58 mn customers – Chain of strategically located One Stop Truck Shops – Smartfleet – 0.26 mn customers (OSTS) – Dedicated fleet sales team Landmark Initiatives
New Business Initiatives Technology Initiatives
Unique integrated non-fuel strategy to enhance Smart Drive Mobile application for retail customers BPCL’s customer experience beyond fuel E business: e-biz.com/e banking (B2B) Bouquet of physical and digital non-fuel offerings to – 90% plus customers collections 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) – Urban Household Solutions (UHS) – Bulk customers direct order (B2B)
17 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
18 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
19 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
20 Improved Financial Performance
Net Worth (INR bn) Total Debt / EBITDA 331.04 271.59 224.67 194.59 2.1x
1.3x 1.2x 1.1x
FY14 FY15 FY16 9MFY17
FY14 FY15 FY16 9MFY17
EBITDA / Interest Total Debt / Equity
30.3x 1.0x
23.2x 18.0x 0.6x 0.6x 0.5x
7.0x
FY14 FY15 FY16 9MFY17 FY14 FY15 FY16 9MFY17
Stable Earnings and Sound Financial Leverage driving Credit Strength
21 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 Net Profit(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)
437 400 353 352 380 1.60 1.12 1.14 300 320 305 1.20 0.81 0.36 0.40 200 0.80 0.32 0.40 100 - - FY12 FY13 FY14 FY15 FY16 9MFY17 FY12 FY13 FY14 FY15 FY16 9MFY17
Net Worth Borrowings Capital employed Debt: Equity ratio
(1) Adjusted for bonds outstanding as on period end
Stable Earnings and Sound Financial Leverage driving Credit Strength
22 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. 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
23 3. Industry Overview Corporate Overview
Credit Highlights
24 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
Source: Oil Consumption from BP Statistical Review 2016,Population from World Bank, Estimates 2015 Source: Central Statistics Office
25 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
• Gasoil (Retail) – Deregulation announced effective 19th October 2014
• Gasoil – Bulk sales completely deregulated since January 2013
• Restricted supply/Targeted subsidies for cooking fuel products
• LPG DBTL scheme - Domestic LPG fully enrolled
• SKO PDS DBTK scheme – launched on pilot basis in 4 districts
Strategic position in the Indian economy with way to deregulation of fuel sector in the country
26 Thank You