Bharat Petroleum Corporation Ltd

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Bharat Petroleum Corporation Ltd. Investor Presentation

February 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.

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

9

3.

Industry Overview

23

3

1.

Corporate Overview

Credit Highlights

4

Introduction • India’s 6th largest company by turnover over INR 2,420 bn in Market Sales

FY17 and INR 2,179 bn in FY16

• India’s 2nd largest Oil Marketing Company (OMC) with domestic sales volume of over 37.68 MMT in FY17 and 36.53 MMT in FY16

− Domestic market share of 20% during FY17

MMT

9MFY18 FY17 FY16 FY15 FY14 FY 13

30.5

37.7 36.5 34.5 34.0 33.3 0

5

10

15

20

25

30

35

40

• Majority Govt. of India shareholding of 54.93% and explicit Govt. Refining Capacity

support through under-recovery compensation mechanism

• # 360 ranking on Fortune 2017 global list; ranks 6th among the only seven Indian companies on the list

• The Govt. of India conferred BPCL with “MAHARATNA” status in Sep 2017

• Well positioned to meet market demand across India through Market Capitalization^

Strategically located Refineries and Marketing Infrastructure

• Successful foray into upstream business. • Ratings at par with the Sovereign − Baa2 (Outlook Positive) by Moody’s / BBB- (Outlook Stable) by Fitch ^ Market capitalization figures as on period end

MMT

30.5

30.5

30.5

30.5

FY14

FY15

FY16

FY17**

9MFY18** INR bn 1123.02 939.79

586.3

653.9

FY15

FY16

332.8

FY14

** includes additional capacity of IREP; all units are fully commissioned and are under stabilization

FY means Financial year ending 31st March

35.5

FY17

Source: National Stock Exchange

India’s Leading Oil and Gas Company with presence across the Hydrocarbon Value Chain 5

9MFY18

Important Milestones GoI acquired Burmah Shell Refineries. Name changed to BPCL in 1977

BPCL and GAIL formed a JV, IGL, for distribution of Natural Gas in entire capital region

BPCL entered the LNG market by signing a gas sales purchase agreement with Petronet LNG

MR capacity enhanced to 12 MMTPA. BPCL and Videocon JV acquired 50% stake in Brazil's EnCana Brasil Petroleo

Kochi Refinery capacity enhanced to 9.5 MMTPA

CCR1 unit at Mumbai Refinery commissioned in March 2014

2017 2016 2015

2014 2012 2011 2009 2007

2008

Restructured business into corporate centre, Strategic Business Units (SBU) and Shared Entities

1998

2002

First in the Indian Oil Industry to roll out ERP Solution

2003

Entered into upstream business and formed Bharat Petro Resources Limited (BPRL)

conferred with “MAHARATNA” status in Sep 2017

Integrated Refinery Expansion Project (IREP) at Kochi

2006 1976

Acquisition of upstream assets in Russia

Started operations at its Bina refinery by launching its crude distillation unit Euro III / IV products launched at Mumbai and Kochi Refinery

6

Commissioning of 6 MMTPA Bina Refinery

Refrigerated LPG storage and handling facility at JNPT and Uran LPG plant commissioned

Commissioned Energy Efficient CDU IV with replacement of CDU I & II at Mumbai Refinery Commissioned Kota Jobner Pipeline and Terminal

Major Subsidiaries/ JVs

Subsidiaries

Upstream

Joint Ventures & Associates

Refining

100.00%

61.65%

City Gas Distribution

Refining 50.00%

Bharat Oman Refineries Limited

25.00%

Bharat PetroResources Limited

Numaligarh Refinery Limited

Kochi Salem Pipeline Pvt. Limited

Indraprastha Gas Limited

Trading Activities 50.00%

50.00%

50.00%

22.50%

Aviation Services

Pipelines

Bharat Stars Services Pvt Limited

Matrix Bharat Pte Limited

Delhi Aviation Fuel Facility (P) Limited

LNG

37.00%

11.00%

Central UP Gas Limited

GSPL India Transco

12.50% 22.50%

Pipelines

21.68%

11.00% Maharashtra Natural Gas Limited

100%

16.00%

49.94% Petronet CCK Limited

Sabarmati Gas Limited

Petronet India Limited

Petronet LNG Limited

25.00% Mumbai Aviation Fuel Facility (P) Limited

Others 21.10%

50.00%

7

Kannur International Airport Ltd.

GSPL India Gasnet

74.00%

Haridwar Natural Gas Private Limited 50.00%

7

Goa Natural Gas Pvt. Ltd.

BPCL-KIAL Fuel Farm Facility Pvt. Ltd.

FINO Paytech Ltd

2.

Business Overview

Credit Highlights

8

Diversified Product Offering and Presence Across Value Chain

Refinery Aviation

Retail

LPG

Industrial/ Commercial

Aviation

Lubricants

Gas

 26.3% market share2  14,255 retail outlets  115 depots and 13 installations

 26.3% market share2  Currently 4,868 distributors  51 LPG bottling plants

 Currently 7,000 customers

 24% market share2 in ATF  43 Aviation service stations

 20.2% market share2  Currently 16,000 customers  More than 1000+ grades of products

 50+ major LNG customers

 Strategically located refineries

 Pan India presence across products

 Various Innovative offerings with ventures in allied business

 Reliable, innovative and caring supplier of I&C products

 Present at all the major gateways and airports for into plane services

 Major OEM tie ups such as Tata Motors, Honda, Genuine Oil, TVS etc.

 Emerging Markets

 Four refineries in Mumbai, Kochi, Numaligarh and Bina

 Pioneer in branded retail outlets, branded fuels ex: Speed

 Current customer base of 59mn incl. retail and bulk

 Pioneer in IT integration and Supply Chain Management

 Only OMC to implement “Apron Fuel Management System”

 Product customization

 1 JV in LNG; 2 gas pipeline JVs

 Refining capacity of 35.5 MMTPA1  15% of the country’s refining capacity3

1. 2. 3.

Includes capacity from IREP units which are fully commissioned and are currently under stabilisation. Market share includes sale by PSU as well as private oil marketing companies. All figures as of 31st December 2017 Source : Ministry of Petroleum and Natural Gas.

9

 City gas distribution networks in 10 cities

Refining Coverage Installed Capacity

Refining Capacity Mumbai – 240 kbpd

Refining Throughput

30.00

25.00

29.24*

29.84*

2.86 2.48

2.73 2.61

3.10 2.78

3.20 2.52

13.10

13.03

12.96

13.41

1 0 .1 1

1 0 .3 2

1 0 .4 0

FY 13

FY14

FY15

20.00

15.00

Kochi – 310 kbpd**

28.69*

28.55 *

31.25*

3.18 2.68 13.60

10.00

5.00 -

BORL – 120 kbpd

Kochi

Mumbai

1 0 .7 1

1 1 .7 9

FY16

FY17

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 refineries across India

** includes additional capacity after IREP - the units are commissioned and are under stabilization

Refinery Utilization rates significantly above global peers 10

935-km cross country pipeline to source crude to BORL

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 Refinery operating at more than 100% of the design capacity during FY17

Mumbai Refinery

 Low cost capacity expansion from 6 MMTPA to 7.8 MMTPA

Kochi Refinery

 GRM of $11.8/bbl during FY17 and $11.60/bbl during 9MFY18 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) 35.00

37.68

36.53

34.45

34.00

33.29

Retail Market Share of MS & HSD *

30.00 Retail

25.00

 MS > 26.80%

Lub es

20.00

Direct

15.00

Aviation

10.00

LPG

 HSD > 26.60%

5.00 -

FY13

FY14

FY15

FY16

FY17

LPG Bottling Plant Capacity (TMTPA)

Thru’put per Outlet BPC Vs. Industry (KL) 250

3687

225

3600 3400 2990

3075

3075

158

163

164

150 125

Capacity

2800

H1FY18

100

2600

75

2400

50

2200

25 0

2000 FY13

*

188

175

3200 3000

200

3363

FY14

FY15

FY16

BPC

FY17

IOC

HPC

Industry

Market share includes sale by PSU as well as private oil marketing companies during 9MFY18

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) – Pioneer program guaranteeing fuel Quality

of total retail sales volume

 In and Out Stores : 157 convenience stores  Tie up with Amazon for “Pick Up” store initiative  Highway Strategy–“GHAR”. The new growth engine – Chain of strategically located One Stop Truck Shops

and Quantity

 Loyalty programmes – One of the largest in India – Petrocard – 0.50 mn customers – Smartfleet – 0.27 mn customers

(OSTS)

– Dedicated fleet sales team

Landmark Initiatives New Business Initiatives

Technology Initiatives

 Smart Drive Mobile application for retail customers  E business: e-biz.com/e banking (B2B) – 90% plus customers collections – Online indenting/tracking  E business: e-bharatgas.com (B2B / B2C) – All India—All Customers (B2C) – Online refill booking/tracking (B2C) – Bulk customers direct order (B2B)

 Unique integrated non-fuel strategy to enhance BPCL’s customer experience beyond fuel

 Bouquet of physical and digital non-fuel offerings to various customer segments

– – – –

Rural Market Place (RMP) Integrated Fleet Management (IFM) Personal Travel Offerings (PTO) Urban Household Solutions (UHS)

13

Ongoing projects – thriving to be self sufficient integrated source of fuel supply

 Integrated Refinery Expansion Project (IREP) at Kochi – Increased refining capacity from 9.5 MMTPA to 15.5 MMTPA along with modernization of existing facilities to produce future quality fuels – Fully Commissioned – stabilization in process

 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

More expansions in Upstream, Downstream business & Marketing network 15

Capex Strategy

Capital Expenditure

165.27 61.25

71.71

FY13

FY14

99.59

113.60

FY15

FY16

FY17

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

273.23

296.68

348.97

1.4x

224.67

1.3x 1.3x 1.3x

FY15

FY16

FY17

9MFY18

FY15

EBITDA / Interest

FY16

FY17

9MFY18

Total Debt / Equity 27.1x

0.78x

22.7x 18.0x

0.58x

16.5x

0.58x 0.45x

FY15

FY16

FY17

9MFY18

FY15

FY16

Stable Earnings and Sound Financial Leverage driving Credit Strength 17

FY17

9MFY18

Improved Financial Performance PAT (INR Billion)/ Networth (%) 25.82

80.00 15.89

13.11 FY12

20.87

20.00 15.00 80.39

26.43 FY13

40.61

50.85

70.56

FY14

FY15

FY16

Adjusted Debt-Equity Ratio (1)

0.80

0.41

0.41

Net Worth

FY15

FY16

FY17

9MFY18

Borrowings

353

250

0.35

0.40 FY14

FY17

Networth %

300 0.36

5.00

Adjusted Capital Employed (INR Billion) (1) 350

0.81

10.00 0.00

Profit after Tax (Rs. Bn)

1.20

25.00

8.79

20.00 -

30.00

22.63

60.00 40.00

35.00

27.10

Networth %

Net Profit (Rs. bn)

100.00

417

Capital employed

385

352 305

300

200

250

150

200 150 100

50 (1)

50

-

FY13

Adjusted for bonds outstanding as on period end

FY14

FY15

Stable Earnings and Sound Financial Leverage driving Credit Strength 18

400 350

100

Debt: Equity ratio

450

FY16

FY17

BPRL’s Upstream Story over the years…….

2015

2016

2017

2013 2012 2011

Declaration of

2010 Schedule B 2009

Joint operator Shale gas entry Australia

2008 2007

2006

2003

NELP VI (5 blocks) Formation of BPRL

Indonesia entry

Brazil & Mozambique acquisition

Formation of E&P setup in BPCL 19

Lead operator

Reserve certification

Russian Commerciality approved in 22 Acquisition Operatorship block discoveries (cum) & Appraisal Wells

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

Russia# Country

Nos

Name of Block

PI%

TAAS Vankorneft

2 2

9.86% 7.88%

26 Exploration Discoveries Block in Appraisal stage Producing Blocks

India

Mozambique 1

Discovery location

Brazil*

1 3 2

3

Cauvery Basin

20 % - 100%

3

Rajasthan

33.3%, 100%

2

Cambay

25%

1

Assam-Arakan

20%

3

Mumbai Basin

20%, 100%

Nunukan 12.5%

Indonesia

1

East Timor

1 JPDA 06/103 20%

Area 1 Offshore 10%

BM-C-30 12.5% BM-SEAL-11 20% BM-POT-16 10% * Held through 50-50 JV with Videocon Ind. # Held through SPVs with OIL & IOCL

Australia

1

EP413

28%

Global Upstream Footprint Partnership with established Oil and Gas operators expected to generate optimal returns for BPCL. Within India Exploration Block

Operator

Mozambique

BPCL Stake Partners

NELP—IV CY/ONN/2002/2

ONGC

40.0%

ONGC

ONGC

20.0%

ONGC

HOEC, BPRL

33.33%

IMC

Exploration Block

Operator

Mozambique Rovuma Basin

Anadarko

BPCL Stake Partners 10.0%

PTTEP, Mitsui and Co., ENH, OVL-OIL

NELP—VI CY/ONN/2004/2 NELP—VII RJ/ONN/2005/1

Exploration Block

NELP—IX CB/ONN/2010/11

Russia

GAIL, BPRL

25.0%

EIL, BIFL, MIEL

AA/ONN/2010/3

OIL

20.0%

ONGC

CB-ONN-2010/8

BPRL,GAIL

25.0%

EIL, BIFL, MIEL

MB-OSN-2010/2

OIL

20.0%

HPCL

BPRL

100.0%

Vankor (2 Blocks)

Srednebotuobinskoe (2 Blocks)

Operator

BPCL Stake Partners

Vankorneft

7.89%2

Rosneft, OIL, IOCL, OVL

TYNGD

9.87%3

Rosneft, BP, OIL, IOCL

Australia and East Timor

DSF 2016 5 Blocks

-

Exploration Block JPDA 06-103

Brazil Exploration Block

Operator

BM-SEAL-11 (3 blocks)

Petrobras

BPCL

Stake1

Partners

20.0%

Videocon

BM-C-30 (1 block)

Anadarko

12.5%

Videocon, BP and Maersk

BM-POT-16 (2 blocks)

Petrobras

10.0%

Videocon, Petrogal, BP

1. 2. 3.

EP-413

Operator

BPCL Stake Partners

Oilex

20.0%

GSPC, Videocon, Japan Energy, Pan Pacific Petroleum

Norwest Energy

27.8%

ARC Energy

Indonesia Exploration Block Nunukan PSC, Tarakan Basin

Operator Pertamina

BPCL Stake Partners 12.5%

Videocon Industries

BPCL’s effective stake held through 50:50 JV with Videocon. 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) 21 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)  BPRL effective interest: 9.87%  2015 Oil Production: c.22 mbbl/d gross to the field; c.2.2 mbbl/d net to BPRL - Gross production expected to increase to 100 mbbl/d (c.9.9 mbbl/d net to BPRL) in the next 2-3 years

acquired: - Participatory shares representing 29.9% of the charter capital of TYNGD - 23.9% equity stake in Vankorneft  BPRL formed BISPL, a wholly owned subsidiary company in Singapore for enabling the above mentioned acquisition  BISPL, with the above mentioned partners, through joint ventures formed two special purpose vehicles (SPVs) which holds the acquired stakes in the two Russian Assets - Taas India Pte. Ltd. - Vankor India Pte. Ltd.  BISPL holds 33% stakes in each of the two SPVs

Vankorneft – Vankor Fields (2 Licenses)  BPRL effective interest: 7.89%  2015 Oil Production: c.440 mbbl/d gross to the field; c.34.7 mbbl/d net to BPRL

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. 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. K. Sivakumar, Director Finance He has over 30 years of Industry experience. He also holds the position of Director in other group companies i.e. Bharat PetroResources Ltd and Bharat Oman Refineries Limited. He has worked in various facets of Finance, Internal Audit, ERP and overseen the Governance, Risk and Control aspects in the Corporation.

Mr. K Padmakar , Director Human Resources  Over 33 years of experience with BPCL  He has had experience across HR and ERP functions

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

India

76.0

3

FY17 China

Brazil

Russia

23.8 21.5

9

74.6

15

FY16

21.8 19.0

22

69.3 UK

24

FY15

19.1 17.6

Germany

29

68.4 Australia

FY14

42

17.1

16.3 US

Singapore

60

69.2

FY13

242

15.7 15.6 Diesel

Source: Oil Consumption from BP Statistical Review 2016,Population from World Bank, Estimates 2015

Source: Central Statistics Office

25

Petrol

LPG

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 1.5%

2013

• Restricted supply/Targeted subsidies for cooking fuel

0.6%

products

• LPG DBTL scheme - Domestic LPG fully enrolled

FY13

FY14

FY15

0.0%

0.0%

FY16

FY17

• SKO PDS DBTK scheme – launched on pilot basis in 4 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 26

Thank You