Bharat Petroleum Corporation Ltd.
Investor Presentation
August 2019 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.
This presentation may not be used, reproduced, copied, published, distributed, shared, transmitted or disseminated in any manner. This presentation is for information purposes only and does not constitute an offer, invitation, solicitation or advertisement in any jurisdiction with respect to the purchase or sale of any security of BPCL and no part or all of it shall form the basis of or be relied upon in connection with any contract, investment decision or commitment whatsoever.
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 8
3. Industry Overview 23
3 1. Corporate Overview
Credit Highlights
4 Introduction
• India’s 6th largest company by turnover over INR 3,376 bn in MMT FY19 and INR 2,773 bn in FY18 FY19 43.1 FY18 41.2 • India’s 2nd largest Oil Marketing Company (OMC) with FY17 37.7 domestic sales volume of over 43.07 MMT in FY19 and 41.21 FY16 36.5
MMT in FY18 FY15 34.5 Market Sales Market 0 10 20 30 40 50 − Domestic market share of 21% during FY19
• Majority Govt. of India shareholding of 53.29% and explicit Govt. support through under-recovery compensation mechanism MMT
• # 275 ranking on Fortune 2019 global list; ranks 6th among the only seven Indian companies on the list 38.3 38.3 30.5 30.5 36.5 • The Govt. of India conferred BPCL with “MAHARATNA” status in Sep 2017
Refining Refining Capacity FY16 FY17 FY18 FY19 Jun-19 • Well positioned to meet market demand across India through INR bn Strategically located Refineries and Marketing Infrastructure 939.79 927.25 833.65 851.32 • Successful foray into upstream business. 653.9
• Ratings at par with the Sovereign
− Baa2 (Outlook Positive) by Moody’s / BBB- (Outlook Stable) by Fitch
FY16 FY17 FY18 FY19 Jun-19 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 Kochi CCR1 unit at Formation of Bharat Gas Shell Refineries. Name formed a JV, market by signing a gas capacity Refinery Mumbai Resources Limited for focus changed to BPCL in IGL, for sales purchase enhanced capacity Refinery on Gas business 1977 distribution of agreement with Petronet to 12 enhanced commission 2018 Natural Gas in LNG MMTPA to 9.5 ed in March Bina capacity enhanced to entire capital MMTPA 2014 2017 7.8 MMTPA region 2016 2015 2014
2012 conferred with “MAHARATNA” 2011 status in Sep 2017
2009 KR modernized 2008 and capacity 2007 enhanced to 15.5 2006 MMTPA 2003 1998 2002 Acquisition of upstream 1976 assets in Russia Integrated Refinery Expansion Project (IREP) at Kochi Started operations at its Refrigerated Bina refinery by launching LPG storage and handling Commissioned Energy Entered into its crude distillation unit facility at Efficient CDU IV with Restructured business into upstream business Commissionin JNPT and replacement of CDU I & II at corporate centre, Strategic First in the Indian and formed Bharat Euro III / IV products g of 6 MMTPA Uran LPG Mumbai Refinery Business Units (SBU) and Oil Industry to roll Petro Resources launched at Mumbai and Bina Refinery plant Commissioned Kota Jobner Shared Entities out ERP Solution Limited (BPRL) Kochi Refinery commissioned Pipeline and Terminal
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 50.00% 20.73% Haridwar Natural Gas Private FINO Paytech Limited Ltd 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% market 26.68% market Currently 8,000+ 26% market 18.83% market 50+ major LNG of 38.3 MMTPA share1 share1 customers share1 in ATF share1 customers 15% of the 14,802 retail Currently 5,907 56 Aviation Currently 16,000 country’s outlets distributors service stations customers refining capacity 123 depots 52 LPG bottling More than 1000+ /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 Fuel Farm Product BGRL for focus in Mumbai, branded retail customer base integration and Operations customization on Gas business Kochi, outlets, branded of 68mn incl. Supply Chain through City gas Numaligarh and fuels ex: Speed retail and bulk Management MAFFFL and distribution Bina DAFFL networks in 10 cities + 13 new GAs
1. Market share includes sale by PSU as well as private oil marketing companies. All figures as of 30th June 2019 2. Source : Ministry of Petroleum and Natural Gas. 9 Refining Coverage
Installed Capacity Refining Throughput Refining Capacity
Mumbai – 12 MMTPA
Kochi – 15.5 MMTPA
BORL – 7.8 MMTPA
Numaligarh – 3 MMTPA MMTPA
. Capacity Utilization consistently above nameplate capacities . State of the art refinery at Bina
* Bina Refinery throughput is considered proportionately because it’s a 50:50 JV
Four Strategically located Refinery Utilization rates above 935-km cross country pipeline to refineries across India name-plate capacities source crude to BORL
10 Bina Refinery
. Bharat Oman Refineries Limited (BORL) – BPCL Interest 50% with 7.8 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) Mumbai Refinery . Bina Kota Pipeline for evacuation of products
. Low cost capacity expansion from 6 MMTPA to 7.8 MMTPA
Kochi Refinery . GRM of $7.5/bbl during Q1FY20 and $9.8/bbl during FY19
Pipelines :
Bina refinery to consolidate refining portfolio required to support downstream retailing market in Northern and Central India
. Numaligarh Refineries Limited (NRL) – BPCL Interest 61.65% with 3 MMT Refining capacity in the north- eastern state of Assam
. Largest producer of paraffin wax in the country
. GRM of $10.67/bbl during Q1FY20 and $11.8/bbl during FY19
Expansion Plans Other Projects
. Capacity expansion from from 3 to 9 MMTPA . Diesel Hydrotreater Project with capex of Rs.1031 crores completed in Jan 2018 . Total Project Cost of Rs.22,594 crores . Bio-refinery through JV planned at a cost of . Integrated with an 8 MMTPA 1,398 km crude Rs.1,259 crores at Numaligarh pipeline from Paradip to Numaligarh . 129.5 km India Bangladesh Product Pipeline . Integrated with a 6 MMTPA 650 km product at a cost of Rs.346 crores including pipeline from Numaligarh to Siliguri Government Grant-in-Aid of Rs.285 crores
Numaligarh refinery to consolidate refining portfolio required to support downstream retailing market in North-eastern India
12 Marketing Operations and Efficiencies
SBU Market Sales (MMT) Retail Market Share of MS & HSD *
42.00 41.21 43.07 36.53 37.68 37.00 34.45
32.00 Retail MS > 28.60% 27.00 Lubes .
22.00 Direct 17.00 Aviation . HSD > 28.67% 12.00 LPG 7.00 2.00 (3.00) FY15 FY16 FY17 FY18 FY19
LPG Bottling Plant Capacity (TMTPA) Thru’put per Outlet BPC Vs. Industry (KL/month)
4500 250 4300 4212 225 200 4100 3957 176 169 178 3900 200 3687 3700 175
3500 3363 Capacity 150 3300 125 3075 Apr-Jun 19 3100 100 2900 75 2700 50 2500 25 FY15 FY16 FY17 FY18 FY19 0 BPC IOC HPC Industry * Market share is PSU Market share on Jun 19 Leading Player with a Diversified product portfolio and a well-established Marketing and Distribution network 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
Kochi – Diversification into Niche Petrochemicals – Propylene Derivatives Petrochemical Project (PDPP)
Retail : Network expansion with infrastructure growth and upgradation
LPG import terminal at Haldia, West Bengal
Bina Kanpur Product Pipeline
Significant Expansion in Downstream & Marketing network to drive future growth
14 Upcoming projects
Investments in Mozambique – FID completed
Refineries – Upgrade/ Expansion / De-bottlenecking
NRL Refinery –Capacity Expansion from 3 MMTPA to 9 MMTPA
Investments in Gas – 11 GAs in 9th round and 2 GAs in 10th round
Expansion of marketing infrastructure across all business verticals
Bio-refinery at Bargarh
Polyol Project at Kochi
New facilities at Rasayani near Mumbai
6000 new retail outlets in the next three years
More expansions in Upstream, Downstream business & Marketing network
15 Capex Strategy
Capital Expenditure / Plan* (Rs.Bn)
147.79 109.82 124.88 89.98 79.50
FY18 FY19 FY20 FY21 FY22
FY18 FY19 FY20 FY21 FY22
* Capex Plan excludes investment in Mozambique and projects pending approval 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 and bulk 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
341.31 367.38 377.08 2.3x 296.68 1.7x 1.6x 1.5x
FY17 FY18 FY19 Jun-19 FY17 FY18 FY19 Jun-19
Total Debt / Equity
0.78x 0.79x 0.68x 0.66x
FY17 FY18 FY19 Jun-19
Stable Earnings and Sound Financial Leverage driving Credit Strength
17 Improved Financial Performance
90.00 80.00 70.00 60.00 50.00 70.56 71.32 40.00 80.39 79.19 30.00 50.85 40.61 Net Net Profit(Rs. bn) 20.00 26.43 10.00 - FY13 FY14 FY15 FY16 FY17 FY18 FY19
Profit after Tax (Rs. Bn)
Adjusted Debt-Equity Ratio (1) Adjusted Capital Employed (INR Billion) (1)
400 700 0.80 0.54 0.65 0.52 Net Worth Borrowings Capital employed 0.60 350 607 600 300 0.40 523 500 475 250 - 380 400 200 FY17 FY18 FY19 Jun 19 305 300 150 200 100 Debt: Equity ratio 50 100 (1) Adjusted for bonds outstanding as on period end - - FY15 FY16 FY17 FY18 FY19 Stable Earnings and Sound Financial Leverage driving Credit Strength
18 BPRL’s Upstream Story over the years…….
2019 2018 2017 2016
2015 2013 Overseas Onshore Operatorship – 2012 Entry in Lower Declaration of Zakum Abu Dhabi Commerciality Mozambique 2011 22 Russian approved in FID discoveries Acquisition Operatorship block Schedule B (cumulative) 2010 Indonesia Lead entry 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 26 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 26 Exploration Discoveries 2 TAAS 9.86% Russia# 2 Vankorneft 7.88% Country Nos Name of Block PI% Block in Appraisal stage
Producing Blocks
FID completed
3 Cauvery Basin 20 % - 100% 3 Rajasthan 33.3, 100% India 3 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 1 Lower Zakum 3% ^ Held through SPV with ONGC Viesh and IOCL UAE 1 Onshore1 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 NELP—VI JPDA 06-103 Oilex 20.0% BM-C-30 Videocon, Energy, Pan BP* 17.85% CY/ONN/2004/2 ONGC 20.0% ONGC (1 block) Total Pacific NELP—VII Petroleum BM-POT-16 Videocon, Norwest RJ/ONN/2005/1 HOEC, BPRL 33.33% IMC Petrobras 10.0% EP-413 27.8% AWE Perth Pty (2 blocks) Petrogal, BP Energy Limited NELP—IX GAIL, EIL, BIFL, Mozambique Russia CB/ONN/2010/11 25.0% BPRL MIEL BPCL BPCL Exploration Block Operator Partners 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) MB-OSN-2010/2 OIL 20.0% HPCL Rovuma Basin Co., ENH, ONGC OVL-OIL DSF 2016 TAAS- Yuryakh Rosneft, BP, TYNGD 9.87%3 5 Blocks BPRL 100.0% - (2 Blocks) OIL, IOCL United Arab Emirates OALP-I BPRL 100.0% - BPCL Indonesia Block Operator Other Partners Israel Stake BPCL BPCL Exploration Block Operator Partners CNPC, INPEX, ENI, Exploration Block Operator Partners Stake Stake Lower Zakum ADNOC 3% Total, Falcon Oil, Nunukan PSC, Videocon ONGC Pertamina 12.5% IOCL Block 32 25% IOCL, OIL Tarakan Basin Industries Videsh Urja (50:50 SPV of BPRL Onshore 1 50% Bharat & IOCL) 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 effective stake held through SPV with ONGC Videsh & IOCL * The operator, Anadarko21 resigned from the operatorship and withdrew from the concession contract in March 2018. BP has been selected as the new Operator and formal approval is being obtained from the Regulator for PI redistribution and appointment of new Operator. Highly Experienced Management Team
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 83.5 FY19 28.3
China 9 24.9
81.1 Brazil 15 FY18 26.2 23.3 Russia 22 76.0 UK 24 FY17 23.8 21.5
Germany 29 74.6 FY16 21.8 Australia 42 19.0
US 60 69.3 FY15 19.1 Singapore 242 17.6
Diesel Petrol LPG
Source: Oil Consumption from BP Statistical Review 2016,Population from World Bank, Estimates 2015 Source: PPAC
24 Indian Oil Industry
Positive Policy actions
• 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 and now implemented in the state of Jharkhand
• Govt. has consistently compensated OMCs including BPCL for under recoveries and ensured reasonable profitability
Strategic position in the Indian economy with way to deregulation of fuel sector in the country
25 Thank You