Mangalore Refineries and Petrochemicals Ltd

Transcription

1 H O L D 18 February, 2008 Key Data (INR) CMP 89 Key Data Bloomberg Code MRPL IN Reuters Code MRPL.BO BSE Code NSE Code MRPL Face Value (INR) 10 Market Cap. (INR mn.) Week High (INR) Week Low (INR) 32 Avg. Daily Volume BETA 1.4 F&O Market Lot 2225 Market Turnover (Rs. Mn) 420 Shareholding % Promoter goup 88.57% Banks/Mutual Fund/FI 1.29% Foreign Institutional Investors 1.16% Individuals/Pvt bodies 8.98% Total % (Rs. bn) FY08 FY09E FY10E Net Turnover Operating Profits OPM (%) PAT PATM (%) EPS (Rs.) Mangalore Refineries and Petrochemicals Ltd. Background. (MRPL), an Oil refining company was set up in 1988 as a joint venture between HPCL and the Aditya Birla Group (ABG). In 2004 ONGC acquired the share holding to the tune of 72%, thereby making MRPL an ONGC subsidiary. Where as HPCL has equity stake of around 16.95% in the company, and is marketing few of its products. Investment Rationale The global demand for petroleum products grew from 83.7 million barrel per day (mb/d) in FY05 to 87.8 mbpd in FY07 i.e. at a CAGR of 2%. Going forward, demand for petroleum products is expected to increase at the same rate i.e. CAGR of 2% over period of 2006 to 2010, which will be mainly driven by China, India, and the Middle East. (Source: IEA) With the domestic projects coming up, the total domestic refining capacity is set to increase from mmtpa in 2007 to mmtpa by 2012 creating a net surplus of mmtpa. Going ahead the domestic demand for petroleum products is expected to grow at a CAGR of 3.3%, while supply is expected to grow at a CAGR of 7.9 % by 2012 (Source: Crisil). This scenario leads to higher exports opportunity of petroleum products for India. MRPL with its Upgradation and Expansion projects lined up will add capacity of another 5.31 mmtpa from the present level of 9.63 mmtpa by FY11. This project is expected to significantly improve distillate yield by processing high quality crude. Higher demand of quality petroleum products in the international market will generate more revenue from exports. This will lead to higher profitability and better refining margins for MRPL. Change in fuel specification norms to Euro III/IV grade of petrol and diesel would lead MRPL to enjoy better sales and superior margins in the lighter and middle products. Domestic as well as international markets like Europe and US have higher demand for such kind of petroleum product Valuation Analyst Dhaval Joshi dhaval.joshi@acm.co.in Tel: (022) We initiate coverage on Mangalore Refinery and Petrochemicals Ltd. with a HOLD recommendation with price-objective of Rs.93. We have arrived at a price target of Rs. 93 by assigning multiple of 7x for FY10E EBIDTA considering its international peers.

2 Industry Overview World refining capacity outlook Several factors will shape developments in the downstream sectors in the coming year. Growing demand for petroleum products indicates that there will be rise in volume of crude oil, which needs to be refined. Due to environmental concerns product specifications are significantly favouring cleaner products that will require considerable reduction in sulphur content as well as improvements on other quality parameters. So going forward the oil product demand structure will shift towards lighter products like LPG, MS and HSD. These challenges can be met only when downstream sector makes substantial investment to set up sufficient distillation capacity. (Source: OPEC (world Oil Outlook 2007) 70% capacity addition from Middle East and Asia Pacific regions The world refining capacity has increased at a CAGR of 0.97% from 83.1million barrel per day (mb/d) in to 87.2mb/p in After 2006, a total of 14 mb/p distillation capacity was announced, out of which only 7.4 mb/d of new capacity will be added to the global refining system through to Almost 70% of new capacity will be located in the Middle East and the Asia-Pacific. Regionally, the Middle East, India and China are the focus for major refining capacity expansions over the decade, accounting together for almost 8 mb/d of announced projects. While developments in China are mainly driven by local demand and in the case of the Middle East and India, it is a combination of rising demand and the policy goal of turning these regions into major refining and product export centres. World-Refining capacity and product consumption comparison (mmtpa) Capacity 2005 Demand 2005 Differential Capacity 2010P Demand 2010P Differential North America 956 1, , South and Central America Europe & Eurasia 1, , Middle East Africa Asia-Pacific 1,163 1, ,258 1, World-Capacity 4,254 3, ,545 4, Note: demand excludes Natural Gas Liquids (NGL) production. Source: Oil and Gas Journal and IEA

3 In 2005, the global refining capacity stood at 4254 million metric tonnes per annum (mmtpa) as against product demand of 3829 mmtpa that reflects a surplus situation. Only in the region of North America a clear deficit is visible. Going forward as well the situation is that of surplus except for the region of North America. We have mentioned below the countries having deficit in capacity in relation to demand. World Refining capacity and Demand. (2005, mb/d) Country Capacity Demand Deficit USA Japan Canada Spain China Mexico Brazil Source: Energy Information Agency (EIA) The demand of the petroleum products is also met by Natural Gas Liquids (NGL), other hydrocarbons, and oxygenate, which does not require refining. It means that still there is demand of actual petroleum products, which is not fulfilled by the existing refineries. This demand can only be met through imports of petroleum products. The demand for petroleum products is highest in the US, followed by China, Japan and South Africa. India is the fifth largest petroleum refining country (19th position in 1995) with a share of 3% of global capacity (Source: BP Energy statistics). Africa is the fastest growing market for India s exports, followed by Latin America, Europe and East Asia. whereas France, Belgium, United Kingdom, China, Singapore, Korea, and Hong Kong emerged as the major markets for India s exports. India s Refinery Scenario India is 5th largest petroleum refining country India s refining sector is dominated by the public sector, accounting for 72% of the total annual refining capacity of approximately 146 (mmtpa). Such capacity is spread across 18 refineries. The balance 28% market share is held by the private sector, which is dominated by Reliance Industries Ltd. (RIL), which accounts for 22.6% of the national refining capacity. Indian oil and gas industry by size as on is estimated at US$ 110bn in (Source: India Brand Equity Foundation).

4 Existing Refining Capacity and its market Share Company Location Capacity (mmtpa) Actual Throughput during (mmtpa) IOC Guwahati Barauni Koyali Haldia Mathura Digboi Panipat Total CPCL Manali Narimanam BRPL Bongaigaon Total-IOC BPCL Mumbai KRL Kochi NRL Numaligarh Total- BPCL HPCL Mumbai Visakhapatnam Total ONGC (MRPL) Tatipaka Manglore Total- ONGC Reliance Jamnagar Essar Oil* Vadinar Total *Being expanded to 10.5 mmtpa, Source: Indian Infrastructure India s Refinery Market Share ( ) (Source: Indian Infrastructure)

5 India s Trade Scenario Demand Scenario and its outlook Net Exporter of petroleum products and growing at CAGR of 2.4% In the last few years, India has become net exporter of petroleum products due to various initiatives taken by the Government. Demand for petroleum products has increased at a CAGR of 2.4% from 104.1mmt in to mmt in and is expected to grow by 3.3% annually during the Eleventh Plan period to about 139.2mmt by The main demand drivers have been LPG, MS, ATF, HSD, Naphtha and Bitumen, which accounts for nearly 79% of the total consumption of petroleum products. The major sectors contributing to this growth were Power, Fertilizer, Aviation, Automobile and Transportation. Even in the long run these sector are expected to drive the demand of petroleum products. The following detail shows the overall scenario of petroleum products from last four years. (mmtpa) (Year) Production Exports Imports Consumption Source: Indian Infrastructure Domestic growth driver of petroleum production Product Growth driver Furnace Oil Power sector, Cement sector Naphtha Power sector Bitumen Road construction sector ATF Aviation sector HSD Transportation MS Transportation Source: Crisil research mmtpa P P P P P CAGR Light distillates % Middle distillates % Heavy distillates % Others % Total Consumption % Source: Crisil research Supply Scenario and its outlook Expected capacity addition to mmtpa by 2012 Refining projects proposed during the Eleventh Plan period The expected refining margin as well as per tonne capital cost of a refinery become the key deciding factors for venturing into a new project. Indian economy growing at 8.5-9% many domestic players have planned their capacity expansion to match to the country s growing economy. Refining capacity is set to increase from mmtpa

6 to mmtpa by FY2012 due to various projects linded up in the country. Such capacity additions are expected to churn more quantity of petroleum products in domestic market and excess production is expected to be exported. Particulars Capacity (mmtpa) Cost(Rs million) Cost (Rs per tonne) Expected Date of Commissioning HPCL, Mumbai ,000 4, CPCL, Manali 1.7 3,000 1, IOC, Panipat 3 8,060 2, RPL, Jamnagar ,000 10, IOC, Haldia 1.5 6,910 4, BPCL, Kochi 2 25,918 12, MRPL, Mangalore ,430 14, HPCL, Vizag ,000 4, HPCL, Bhatinda 9 132,567 14, BPCL, Bina 6 103,780 17, IOC, Paradip ,000 10, NOCL, Cuddalore 6 40,000 6, Note: The List of projects is indicative Capital expenditure for some of the projects includes non-refinery capex like pipeline, petrochemical unit, etc. Source: Crisil Research Total Supply of Petroleum Products Excess supply may lead to more export opportunity India s export of petroleum products has been increasing, whereas domestic demand growth has been slower in relation to new capacity additions. This trend of capacity additions is likely to continue in the future as well, as demand for petroleum products is expected to grow at a CAGR of 3.3% while supply is expected to grow at a CAGR of 7.9 % in next five years ( ). Thus creating a net surplus of 60.2 mmt in (see the table below). This will mandate to increase export of petroleum products from the present level of 21.5 mmt in mmtpa P P P P P CAGR Light distillates % Middle distillates % Heavy distillates % Others % Total Supply % Source: Crisil research Surplus (+)/Deficit (-) of Petroleum Products mmtpa P P P P P Light distillates Middle distillates Heavy distillates Others Surplus (+)/deficit (-) P: Projected Source: CRISIL Research

7 Refinery utilization rates ( ) (Source: CRIS INFAC) Overall capacity utilization of the industry has increased to 100.4% in FY as compared to 98.7% in FY ONGC (MRPL) and HPCL have increased their operating rate to 129.1% and 129.2% respectively in FY the highest in the industry. While IOC and Essar Oil operate below the industry average of 93.7% and 23.5% respectively. To meet the demand of the petroleum Products, the Company operates at full capacity utilization and effectively caters to the demand of international market through exports.

8 Business Overview First refinery in India to meet EURO III norms. (MRPL), is a subsidiary of Oil and Natural Gas Corporation (ONGC), with a total crude oil refining capacity of 9.69 mmtpa. It was the first refinery in India to produce MS (Petrol) and HSD (Diesel) to meet the Euro-III norms. Euro norms is the vehicular emission standard proposed by the Union government for the auto-fuel policy launched in the country for improvement of air quality. MRPL has 8% share of the total domestic refining capacity of 146 mmtpa. MRPL s Product profile: MRPL s products are mainly in the middle and light distillate category like Motor Spirit, HSD, LPG, SKO, Naphtha, and ATF. MRPL s product portfolio comprises mainly of middle & light distillates categorized crude product. As middle and light product enjoy better margin than heavy distillate products. Focus in middle and light distillate products (Source: Company)

9 We observe from the above chart that HSD, ATF, FO, Naphtha, and MS have highest proportion in turnover with 49.94%, 6.84%, 10.74%, 13.52%, and 6.6% respectively. Going forward we expect that light and middle products will contribute to the revenue in a major way. Key Strengths In , the Company achieved highest ever refinery crude throughput at mnt with a capacity utilization of 129.1%. At this utilization level, the company stands at second position when compared to industry average of 97.6%. We believe that till the upgradation and expansion project comes online, the throughput level would remain the same at 12.54mmtpa. till that time company will maintain its capacity utilization level to 129%. Particulars Installed Capacity (mmt) Throughput (mmt) % Change Production (mmt) % Change Capacity Utilisation (%) 108% 122% 125% 129% Note: Capacity utilization is calculated on installed capacity by dividing throughput. 129% capacity utilization level (Source: Indian Infrastructure) In FY , the Company has achieved highest ever refinery throughput and production of and mmtpa respectively with a total fuel loss of 6.6%. Over the period the Company has increased its throughput level from 7.35mmtpa in FY03 to 12.54mmtpa in FY07 and reduce its fuel loss from 7.7% in FY03 to 6.6% in FY07.

10 Increase in thruput level to 12.54mmt in FY07 (Source: Company) Broader Customer Base MRPL sells its products to HPCL, IOC, BPCL, HPCL, IBP and Indian Railways for supplying diesel. Besides, MRPL has signed long-term contract with State Trading Corporation (STC), Mauritius for supplying 1mmtpa of petroleum products for 3 years. At present, MRPL is the sole supplier for all the 30 depots of Bangalore Municipal Transportation Corporation. Higher refining margins as compared to Singapore benchmark Better Product Mix and Operating efficiency has increased refining margins Increase in crude oil price over the years has improved the price realization of the petroleum products. Better operating efficiency and better product mix also contribute towards higher refining margin from $3.16/bbl in FY04 to $4.79/bbl, which is in line with the Singapore GRM. Going ahead we believe MRPL s GRM would be in line with Singapore GRM till the upgradation and expansion project of its refinery. (Source: IEA & CRISIL Research, Company) 10

11 Key Initiatives ONGC and HPCL have entered into a Memorandum of Understanding for product sale-purchase and also for providing infrastructure services and co-operation in energy and related fields for a period of 4 years. This will facilitate greater evacuation of petroleum products and marketing of MRPL products by HPCL in the domestic market. This will lead to assured and higher domestic sales. The Company is setting up retail outlets to take advantage of direct marketing. At present the Company is working on 15 retail outlets in three Southern states of Karnataka, Andhra Pradesh and Tamil Nadu, which will be operational by March 2008 under the brand name of HiQ, while long-term goal is to set up 500 retail outlets across India. MRPL has obtained approval from Ministry of Petroleum and Natural Gas for direct marketing of Aviation Turbine Fuel (ATF) to airlines. In order to encash the marketing margins, MRPL and Shell has decided to market international aviation fuel directly to domestic and international airlines for which discussions with various airlines are in an advance stage. This will add more sales of ATF in domestic market. Expansion/Growth Plan Isomerisation & Mixed Xylene Projects Expansion of refinery with a capex of Rs bn In India government-run crude oil refineries such as IOC, HPCL and MRPL have invested around Rs bn to meet the EURO IV quality standards and are on track to meet the deadlines set for them. The Isomerisation Project will help the company to produce Euro IV grade petrol and diesel in India with an estimated cost of Rs. 2.34bn. There is a huge demand for Euro IV grade in Europe and United State of America. MRPL is planning to expand its Refinery Up gradation-cum-capacity-expansion project (from the present 9.69 mmtpa to 15 mmtpa), involving a capital expenditure of Rs.79.4 bn, which will be financed through debt of Rs. 53 bn and internal accruals of Rs. 27bn. The Company has appointed Engineers India Ltd. as Project Management Consultant for this project. This upgradation cum expansion will not only lead to higher production but also to better yield and improved product mix. Once this project is complete, MRPL s refinery complexity and refining margins will be comparable with the best refineries. Refinery largely depends on availability of crude oil. MRPL is in the process of signing an agreement with Cairn India Ltd. and State Government of Rajasthan for greater availability of domestic crude oil with reasonable price as well as for fiscal incentives from state government. The Company has promoted a SPV with ONGC called ONGC Mangalore Petrochemicals Ltd. (OMPL) for implementing the Aromatics Project, which is estimated around Rs. 48.5bn to produce paraxylene, a value added product. 11

12 Key Concerns Price volatility: Crude Oil and Petroleum products are globally traded commodities and its prices are also linked with international price. The price of the Crude Oil and petroleum products depend on the demand-supply scenario of international market and geo political uncertainties etc. Any change in the above scenario will affect the overall profitability of the company. Higher Interest cost: As the Company is raising Rs.53 bn for Capex, hence increase in interest cost has depreciated PATM from 4.7% in FY09 to 3.4% in FY10. Peer comparison Particular Net Sales (Rs. bn) OPM (%) NPM (%) ROCE (%) FY07 FY07 FY07 FY07 MRPL 2, Chennai Petro. 2, Source: Capitaline MRPL has achieved net sales of Rs bn in FY07, and also enjoying better Operating margins and ROCE as compared to its peer group to 5.81% and 24.07% respectively. Higher Utilisation level (Source: Company) The higher utilization level of plant has enabled MRPL to register higher revenue as compared to CPCL in FY07, inspite of having lower installed capacity (as can be seen in the chart given above). Further, higher utilization level has also enabled 12

13 MRPL to obtain higher margins relative to the CPCL in FY07. Due to change in fuel specification norms to Euro IV grade MS and diesel, there is a higher demand of these products in domestic as well as in international market. To grab this opportunity MRPL has already started production of Euro IV grade MS and diesel where as CPCL will commence the production of Euro IV grade fuel after Financials Net sales have grown at a CAGR of 2% from Rs bn in FY04 to Rs bn in FY07. Increase in sales is mainly attributable to increase in production of petroleum products as well as increase in price of crude oil. We expect the Company s sales to grow at a CAGR of 3.5% from Rs bn in FY07 to Rs bn in FY10E. We expect a minor dent in the company s sales in FY10 as compared to FY09. This is due to our assumption of subduing crude prices. (Source: Research) We have assumed crude to trade at $84 per barrel in FY10 in comparison to present level of $91 per barrel. Operating margin Operating profit margins has declined over the years from 10.33% in FY05 to 5.3% in FY07 due to increase in raw material cost (crude oil price) as a percentage to sales. (Source: Research) 13

14 Going forward we expect operating margin to increase from 5.33% in FY07 to 7.83% in FY10 as we expect that price of the crude will increase to $88p/b in FY09 and $84 in FY10. Further reduction in the crude oil prices may show fall in the operating margins to 7.83% in the FY10. Capex: MRPL is planning to expand its Refinery Up gradation-cum-capacity- Expansion project (from the present 9.69 mmtpa to 15 mmtpa), involving a capital expenditure of Rs.79.4 bn. The cost of these projects are not the part of our projections. Outlook for demand/supply (Mb/d) Particular E 2009E 2010E World Consumption Supply Non Opec OPEC Total Supply Surplus/(Deficit){with spare capacity remaining unutilized} OPEC spare capacity Surplus/Deficit {After utilizing spare capacity of OPEC} Source: Energy Information Agency (USA), Research. In 2007 the average crude price was traded at $72 per barrel while the world demand of crude was 85.58mb/d against the total supply of mb/d, leading to deficit of 5.32mb/d. In 2008 EIA expects crude oil price to trade at $87 per barrel and $82 per barrel in 2009 after considering its demand and supply scenario. Based on the similar expectations we expect the crude oil to trade at $84 per barrel. Sensitivity Analysis With our assumption of crude price trading at $84 per barrel in FY10, various scenarios for crude oil price and its effect on company s earnings have been analyzed. (Source: Research) 14

15 Financial Comparison of MRPL with Peers Year Crude Oil Price (% Change) Industry Growth Average Sales Growth (% Change) OPMG (%Change) NPMG (%Change) Sales Growth (% Change) MRPL OPMG (%Change) NPMG (%Change) NA NA NA NA NA NA NA NA NA NA NA NA (Note: Industry includes Some of the international and Domestic companies like IOC, BPCL, HPCL, RIL, MRPL, Valero Energy, Formosa Petroche.,Nippon Oil Corp.,PetroChina Co., Cheveron Corp., Petrobras.) NA: - Data not available, OPMG: Operating Profit Margin Growth, NPMG: Net Profit Margin Growth (Source: Bloomberg, Research) Crude oil prices and product mix of the industry are two major factors in determining the revenues and profit margins of the refining companies. The revenue and margins are positively correlated with the prices of crude oil i.e. with rise in prices of crude oil both revenue and margins may increase and if prices fall then vice versa. The higher operating efficiency with better product mix, lined with the high crude price drives MRPL s profitability. Valuation We have considered two valuations method to value MRPL. 1. EV/EBIDTA 2. Assets Replacement Method EV/EBIDTA We have considered EV/EBIDTA to value MRPL. Global Companies EV/EBIDTA (FY10E) Valero Energy 5 Formosa Petroche. 13 Nippon Oil Crop. 7 Average 8.33 Source: Bloomberg Brokers Consensus 15

16 Particular EBIDTA (FY10E) Multiple assigned Price EV/EBIDTA Source: Research International players are trading at an average EV/EBIDTA multiple of 8.33x for FY10E. Considering MRPL being a standalone refinery company, while international players being integrated (Refinery and marketing co) we have assigned a multiple of 7x to arrive at a target price of Rs.93. Assets Replacement Method MRPL (Rs. mn) Replacement cost Capacity 9.7 (mmtpa) Less: Debt Current replacement value No of shares Value per share 80.5 Source: Research We have considered BPCL s current expansion plan for replacement cost (Rs.17000mn per tonne) and we arrived at a price of Rs Based on above mentioned valuation and concerns associated with Mangalore Refinery and Petrochemicals Limited, we recommend a HOLD. 16

17 Profit and loss A/C (Rs. in bn) Particular E 2009E 2010E Avg. Crude Oil Prices $ / bbl Nymex: Net Sales Total Expenditure Operating Profit Other Income EBIDTA Depreciation EBIT Interest & Finance Charges PBT Tax Profit for the Year Growth in Sales (%) Operating Profit Growth (%) PAT Growth (%) Operating Profit Margin (%) Net Profit Margin (%) (Source: Research, Company) Balance Sheet (Rs. in bn) Particulars E 2009E 2010E Sources of Funds Total Share Capital Total Reserves Total Shareholder Fund Total Loan Fund Net Deferred tax Liability Total Capital Employed Application of Funds Gross block Less: Depreciation Net Block Capital work in Progress Investments Net Deferred Tax Asset Net Current Assets Total Assets (Source: Research, Company) 17

18 Cash Flow Statement Rs. in bn Particulars E 2009E 2010E Profit Before Tax ADD Depreciation Net Interest Expense Operating Profit before working Capital Change Cash generated from operations Less: taxes Net Cash From Operating Activities Net Cash used in Investing Activities Net Cash from Financing Activities Net Inc/(Dec) in cash and Cash Equivalents OP. Bal. Of cash and cash equivalents Cl. Bal. Of cash and cash equivalents (Source: Research, Company) Ratios Particulars Profitability Ratios Operating Profit Margin (%) EBDITA (%) PATM (%) ROCE (%) RONW (%) Capital Structure Ratios Debt-Equity Ratio Current Ratio Interest Coverage ratio Turnover Ratios Fixed Assets (X) Inventory (X) Debtors (X) Per Share Ratio EPS CEPS Book value per share Price/BV P/E (Source: Research) 18

19 ANNEXURE I Process Crude oil is a complex mixture of hydrocarbons and contains relatively small quantities of other materials such as oxygen, nitrogen, sulphur, salt and water. Crude oil in its raw form useless as a mixture, to extract the maximum value from it, it has to be refined into other products. For getting a maximum value from the crude, it has to pass through the crude distillation unit. Crude distillation unit separates crude oil into fractions at different boiling range. At Each and every boiling range different variety of product is collected such as light, middle, and heavy distillates product. Light product requires low temperature of around 40C to 205C. Middle product requires a temperature of 205C to 350C where as heavy product requires high temperature of 350C to 600C. When one barrel of crude oil is refined, will contain following products: Heavy Distillates: Furnace Oil (FO), Bitumen, and Lube Oils (LO) Middle Distillate: High Speed Diesel (HSD), Superior Kerosene Oil (SKO), Aviation Turbine Fuel (ATF) Light Distillate: Liquefied petroleum gas (LPG) and Motor Spirit (MS), Naphtha To understand the diversity contained in the crude oil, and to understand why refining crude oil is so important, please look through the products listed below that is derived from the crude oil: Products Boiling Range Usage Petroleum gas 40C Used for heating, cooking, making plastics Naphtha or Ligroin C Petrochemical feedstock Gasoline C Domestic heating fuel Kerosene C Fuel for jet engines and tractors Gas oil or Diesel C Automotive fuel Lubricating oil C Used for motor oil, grease, other lubricants Heavy Gas or Fuel oil C Used for industrial fuel Residuals fuel oil 600C Coke, asphalt, tar, waxes Types of Crude Oil Sour crude Oil: It contains the impurities like hydrogen sulfide (H2S) and carbon dioxide, or mercaptans. All crude oil contains some impurities. When the total sulfide level in the oil is > 1 % the oil is called sour. Sweet Crude Oil: It contains small amounts of hydrogen sulfide and carbon dioxide. Petroleum is considered sweet if it contains less than 0.5% sulfur compared to a higher level of sulfur in Sour crude oil. Brent Crude Oil: Brent blend is a light crude oil, contains approximately 0.37% of sulphur, classifying it as sweet crude. Indian Basket of Crude Oil India s crude oil basket comprises Oman-Dubai sour (high sulphur) grade crude and Brent dated sweet (low sulphur) crude in the ratio of 59.8:

20 Notes: HNI Sales: Raju Mewawalla, Tel: Institutional Sales: Bharat Patel, Tel: , / 121. Disclaimer: This report is based on information that we consider reliable, but we do not represent that it is accurate or complete and it should not be relied upon such. or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in the report. and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency we have incorporated a Disclosure of Interest Statement in this document. This should however not be treated as endorsement of the views expressed in the report Disclosure of Interest. 1. Analyst ownership of the stock NO 2. Broking Relationship with the company covered NO 3. Investment Banking relationship with the company covered NO 4. Discretionary Portfolio Management Services NO This document has been prepared by the Research Desk of Asit C Mehta Investment Interrmediates Ltd. and is meant for use of the recipient only and is not for circulation. This document is not to be reported or copied or made available to others. It should not be considered as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may from time to time have positions in and buy and sell securities referred to herein. 20