#1Energising Business Energising Society ek boond paani "Project BOOND Bharat Petroleum Corporation Ltd. Investor Presentation Energising Environment February 2019 LNG Bharat Petroleum#2Disclaimer 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, 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#3Table of Contents 1. Corporate Overview 2 Business Overview 3. Industry Overview 3 4 8 23#41. Corporate Overview 4#5Introduction · • · • • India's 6th largest company by turnover over INR 2,772 bn in FY18 and INR 2,420 bn in FY17 O India's 2nd largest Oil Marketing Company (OMC) with domestic sales volume of over 41.21 MMT in FY18 and 37.68 MMT in FY17 Domestic market share of 21% during FY18 Majority Govt. of India shareholding of 53.93% and explicit Govt. support through under-recovery compensation mechanism # 314 ranking on Fortune 2018 global list; ranks 6th among the only seven Indian companies on the list O The Govt. of India conferred BPCL with "MAHARATNA" status in Sep 2017 • Well positioned to meet market demand across India through 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 FY means Financial year ending 31st March Refining Capacity Market Sales Market Capitalization^ MMT FY18 FY17 FY16 41.2 37.7 36.5 FY15 34.5 FY14 34.0 0 5 10 15 20 20 25 25 30 35 40 45 36.5 36.5 30.5 30.5 30.5 FY15 FY16 FY17 FY18 Dec-19 INR bn 939.79 927.25 786.89 -653.9 586.3 FY15 FY16 FY17 FY18 Dec-19 India's Leading Oil and Gas Company with presence across the Hydrocarbon Value Chain 5 Source: National Stock Exchange MMT#6Important Milestones Gol 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 Bharat Petroleum INDRAPRASTHA GAS LIMITED PETRONET LNG LIMITED CCR¹ unit at Formation of Refinery capacity enhanced to 9.5 MMTPA Mumbai Bharat Gas Refinery commission Resources 2018 Limited for ed in March 2014 focus on Gas business 2017 2016 2015 2011 2009 2008 2007 2006 2003 1976 1998 2002 Restructured business into corporate centre, Strategic Business Units (SBU) and Shared Entities ERF First in the Indian Oil Industry to roll out ERP Solution Bharat Petro Resources Entered into upstream business and formed Bharat Petro Resources Limited (BPRL) Started operations at its Bina refinery by launching its crude distillation unit Euro III/IV products launched at Mumbai and Kochi Refinery 6 2012 2014 Commissioning of 6 MMTPA Bina Refinery Refrigerated LPG storage and handling facility at JNPT and Uran LPG plant commissioned Acquisition of upstream assets in Russia Integrated Refinery Expansion Project (IREP) at Kochi conferred with "MAHARATNA' status in Sep 2017 Commissioned Energy Efficient CDU IV with replacement of CDU I & II at Mumbai Refinery Commissioned Kota Jobner Pipeline and Terminal#7Major Subsidiaries/ JVs Bharat Petroleum Subsidiaries Joint Ventures & Associates Upstream 100.00% Refining Refining City Gas Distribution Pipelines Aviation Services Trading Activities 61.65% 50.00% Bharat Oman Refineries Limited 22.50% 50.00% 50.00% Indraprastha Gas Limited Kochi Salem Pipeline Pvt. Limited Bharat Stars Services Pvt Limited 50.00% Matrix Bharat Pte Limited Bharat PetroResources NRL 25.00% 25.00% 11.00% 37.00% Bharat PetroResources Limited Numaligarh Refinery Limited Ratnagiri Refinery & Petrochemicals O Central UP Gas Limited GSPL India Transco Limited Delhi Aviation Fuel Facility (P) Limited LNG 12.50% 22.50% 11.00% 21.68% Maharashtra GSPL India Aviation Gas Natural Gas Limited Gasnet Kannur International Airport Ltd. Petronet LNG Limited Services 49.94% 25.00% 100.00% 74.00% Bharat Gas BPCL-KIAL Fuel Mumbai Aviation Sabarmati Gas Others Resources Farm Facility Pvt. Limited Fuel Facility (P) Limited Ltd. Limited 50.00% 20.73% Haridwar Natural Gas Private Limited 50.00% Goa Natural Gas Pvt. Ltd. FINO Paytech Ltd#82. Business Overview 8#9Diversified Product Offering and Presence Across Value Chain • BHARAT PETROLEUM CORPORATION LIMITED Refinery Retail LPG सरक Industrial/ Commercial Industrials Commercial LINES Aviation Lubricants Gas LNG LNG Refining capacity of 36.5 MMTPA 15% of the country's refining capacity • 26% market share¹ 14,651 retail outlets 115 depots and 13 installations Strategically • Pan India located refineries presence across products • 26.5% market share¹ • Currently 5,642 distributors • 51 LPG bottling plants • Various Innovative offerings with ventures in allied business Currently 8,000+ customers . Reliable, innovative and caring supplier of I&C products 24.8% market share¹ in ATF 43 Aviation service stations Present at all the major gateways and airports for into plane services • 14.7% market share1 Currently 16,000 customers More than 1000+ grades of products • Major OEM tie ups such as Tata Motors, Honda, Genuine Oil, TVS etc. 50+ major LNG customers Emerging Markets • Four refineries in Mumbai, Kochi, Numaligarh and Bina • Pioneer in branded retail outlets, branded fuels ex: Speed • Current customer base of 68mn incl. retail and bulk • Pioneer in IT integration and Supply Chain Management Only OMC to implement "Apron Fuel Management System" • Product customization 100% subsidiary BGRL for focus on Gas business City gas distribution networks in 10 cities + 11 new GAS 1. 12 Market share includes sale by PSU as well as private oil marketing companies. All figures as of 31st December 2018 2. Source: Ministry of Petroleum and Natural Gas. 9#10Refining Coverage Installed Capacity Refining Throughput- Refining Capacity 40.00 34.70* 31.25* 29.84* 3.35 Mumbai -240 kbpd 30.00 28.69* 29.24* 3.18 2.81 Bharat Petroleum 2.73 3.10 3.20 2.68 2.61 2.78 2.52 20.00 14.29 13.03 12.96 13.41 13.60 Kochi 310 kbpd Bharat Petroleum 10.00 11.79 14.25 10.32 10.40 10.71 BORL 120 kbpd BHARAT OMAN REFINERIES LIMITED Numaligarh-60 kbpd NRL FY14 FY15 FY16 FY17 FY18 ■ Kochi Mumbai ■Numaligarh Bina MMT 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 Refinery Utilization rates significantly above global peers 935-km cross country pipeline to source crude to BORL 10#11Bina 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 ■ 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 ■ Low cost capacity expansion from 6 MMTPA to 7.8 MMTPA ■ GRM of $2.1/bbl during Q3FY19 and $11.7/bbl during FY18 Pipelines ■■■------ Jammu & Kashmir INDIA Arunachal Pradesh Himanchal Pradesh BHARAT OMAN REFINERIES LIMITED Punjab Uttaranchal Haryana ADelhi Sikkim Uttar Pradesh Rajasthan NRL Refinery Ass Bihar Meghalaya Manipur Jharkhand Mizoram West Bengal Tripura Orrisa Gujarat Madhya Pradesh Maharastra Mumbai Refinery Chhattisgarh Andhra Pradesh Goa Karnataka Kochi Refinery Tamil Pondicherry Nadu Kelala Bina refinery to consolidate refining portfolio required to support downstream retailing market in Northern India 11#12Marketing Operations and Efficiencies SBU Market Sales (MMT) 41.21 42.00 37.68 36.53 37.00 34.00 34.45 32.00 27.00 22.00 17.00 12.00 7.00 2.00 (3.00) FY 14 FY 15 FY 16 FY 17 FY 18 LPG Bottling Plant Capacity (TMTPA) 3900 3700 3500 3300 3075 3075 3100 2900 2700 2500 FY14 FY15 3363 FY16 3687 FY17 3957 FY18 Capacity ■Retail Lubes Direct Retail Market Share of MS & HSD * MS 26.32% ■ Aviation HSD 26.46% LPG Thru'put per Outlet BPC Vs. Industry (KL/month) 250 225 200 175 150 100 50 25 ྨ 8 ༔ ཤྩ ཤྩ ༅ ཎྜ ༞ ཟླ ॰ 125 188 162 157 164 Apr-Dec 18 Market share includes sale by PSU as well as private oil marketing companies during H1FY19 0 BPC LOC HPC Industry Leading Player with a Diversified product portfolio and a well-established Marketing and Distribution network 12#13Efficient Marketing Operations and Infrastructure Continuous innovation to extend customer focus and improve operational and financial efficiency. Retail Initiatives Launched the first branded fuel in India i.e. Speed • Over 8,000 Automated Outlets, Generating over 75% 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 (OSTS) Dedicated fleet sales team Speed 93 HI-OCTANE HIGH PERFORMANCE PETROL O Speed High Performance Pe New Business Initiatives • 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) GHAR அ Pure for Sure Brand and Customer Loyalty - Pure for Sure (PFS) Pioneer program guaranteeing fuel Quality and Quantity Loyalty programmes - One of the largest in India - Petrocard - 0.50 mn customers - Smartfleet - 0.27 mn customers Landmark Initiatives SmartFleet Petro Card 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) 13#14Ongoing 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 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#15Upcoming projects Funding for upstream developments and new assets Refineries - Upgrade/ Expansion / De-bottlenecking NRL Refinery -Capacity Expansion from 3 MMTPA to 9 MMTPA 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#16Capex Strategy Capital Expenditure 165.27 113.60 99.59 89.98 71.71 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#17Improved Financial Performance Net Worth (INR bn) 341.52 361.40 296.68 273.23 Total Debt/ EBITDA 1.2x 1.7x 1.9x 1.6x FY16 FY17 FY18 Apr-Dec 18 FY16 FY17 FY18 Apr-Dec 18 EBITDA / Interest 27.1x 22.7x 17.6x 9.4x FY16 FY17 FY18 Apr-Dec 18 Total Debt/Equity 0.78x 0.68x 0.63x 0.58x FY16 FY17 FY18 Apr-Dec 18 Stable Earnings and Sound Financial Leverage driving Credit Strength 17#18Improved Financial Performance Net Profit (Rs. bn) 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 10.00 40.61 50.85 80.39 79.19 20.00 26.43 5.00 0.00 FY13 FY14 FY15 FY16 FY17 FY18 Networth % Adjusted Debt-Equity Ratio (1) Profit after Tax (Rs. Bn) Networth % Adjusted Capital Employed (INR Billion) (1) 400 600 Net Worth Borrowings Capital employed 0.80 0.60 350 0.49 0.54 492 500 0.39 300 417 0.40 400 250 385 352 200 305 300 T FY16 FY17 FY18 Apr-Dec 18 150 200 100 50 50 100 Debt: Equity ratio (1) Adjusted for bonds outstanding as on period end FY14 FY15 FY16 FY17 FY18 Stable Earnings and Sound Financial Leverage driving Credit Strength 18#19BPRL's Upstream Story over the years..... 2003 Indonesia entry 2009 NELP VI (5 blocks) 2007 2008 2006 Formation of BPRL Formation of E&P setup in BPCL 2010 Brazil & Mozambique acquisition 2011 2012 2013 Schedule B Lead operator Joint operator Shale gas entry Australia 2018 2017 2016 2015 Russian Acquisition Declaration of Commerciality approved in Operatorship Entry in Lower Zakum 22 discoveries (cumulative) block#20Upstream 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 Country Nos Name f Block P1% 1 BM-C-30 12.5% Brazil* 3 BM-SEAL-11 20% 2 BM-POT-16 10% Discovery location 2 Russia# 2 TAAS Vankorneft 7.88% 9.86% Mozambique 1 Area 1 Offshore 10% UAE^ 1 Lower Zakum 3% Israel 1 Block 32 25% India 3 Cauvery Basin 26 Exploration Discoveries 20%-100% 3 Rajasthan 33.3, 100% 2 Cambay 1 Assam-Arakan 25% 20% 3 Mumbai Basin 20,100% Indonesia 1 Nunukan 12.5% East Timor 1 JPDA 06/103 20% Australia 1 EP413 28% Block in Appraisal stage Producing Blocks * Held through 50-50 JV with Videocon Ind. # Held through SPVS with OIL & IOCL ^ Held through SPV with ONGC Viesh and IOCL#21Global 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 NELP-IV CY/ONN/2002/2 ONGC 40.0% ONGC Exploration Block Operator BM-SEAL-11 (3 blocks) BPCL Stake1 Partners Australia and East Timor BPCL Operator Exploration Block Stake Partners GSPC, Petrobras 20.0% Videocon Videocon, Japan NELP-VI CY/ONN/2004/2 ONGC 20.0% ONGC NELP-VII RJ/ONN/2005/1 HOEC, BPRL 33.33% IMC BM-C-30 (1 block) BM-POT-16 (2 blocks) Videocon, Anadarko 12.5% BP and Maersk JPDA 06-103 Oilex 20.0% Energy, Pan Pacific Petroleum Petrobras 10.0% Videocon, Petrogal, BP EP-413 NELP-IX CB/ONN/2010/11 AA/ONN/2010/3 CB-ONN-2010/8 MB-OSN-2010/2 GAIL, BPRL OIL BPRL, GAIL OIL 25.0% 25.0% EIL, BIFL, MIEL 20.0% ONGC EIL, BIFL, MIEL 20.0% HPCL Mozambique Norwest Energy Russia 27.8% ARC Energy Exploration Block Operator BPCL Stake Partners Exploration Block Operator BPCL Stake Partners Mozambique Rovuma Basin PTTEP, Mitsui and Anadarko 10.0% Vankor (2 Blocks) Co., ENH, OVL-OIL Rosneft, Vankorneft 7.89%2 OIL, IOCL, OVL DSF 2016 Srednebotuobins koe TYNGD 9.87%3 5 Blocks OALP-I BPRL 100.0% Rosneft, BP, OIL, IOCL United Arab Emirates (2 Blocks) BPRL 100.0% Indonesia Exploration Block Operator BPCL Stake4 Partners Israel Exploration Block Nunukan PSC, Tarakan Basin Operator BPCL Stake Partners Lower Zakum ADNOC 3% Pertamina 12.5% Videocon Industries CNPC, INPEX, ENI, TOTAL, OVL, IOCL Exploration Block Block 32 Operator ONGC Videsh BPCL Stake Partners 25% IOCL, OIL 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) BPCL's effective stake held through SPV with ONGC Videsh & IOCL 4.#22Highly Experienced Management Team The senior management team has in-depth knowledge and extensive experience in the Oil and Gas industry. Best in Class Management Team in Place 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 N. Vijayagopal, Director Finance • He has vast experience of 31 years in financial management and is a member of the Institute of Chartered Accountants of India and a Bachelor of Law. ⚫ He has experience in Treasury Management, Risk Management, Taxation and Budgeting, Fund Management etc. Mr. R Ramachandran, Director Refineries Almost 34 years of industry experience Has previously held the post of MD, Bharat Oman Refineries and has experience across Refinery Operations, Product Planning, Technical Services, Project Conceptualization, and Project Financing Numerous Awards & Recognition PRSI Beat Public Sector Organization (2018) FIPI Beat Project Management Co. (2018) Awarded 'Maharatna' Status BOOK OF PRSI Best RTI Implementation by PSU (2018) ASIA RECORDS Largest corporate Brand Engagement Programme Business Standard Star PSU Award (2018) O Excellent Corporate Governance 2018 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. He has headed functions like Pipelines, Supply Chain Optimization, Retail Business Unit, LPG Business Unit, Central Procurement etc. 1.. PRSI : Public Relation Society of India 121 2. Federation of Indian Petroleum Industry Awarded BPCL - Best Project Management Company - 2018" 3. Golden Peacock (Institute of directors) Awarded BPCL "Excellent Corporate Goverance - 2018 22 22#233. Industry Overview 23 23#24India - Attractive Industry Dynamics Significant potential for domestic O&G companies given low per-capita oil consumption and growing demand. Per Capita Oil Consumption bbl/day per 1,000 People India Oil Demand Million Tonnes India 3 China 9 Brazil 15 Russia 22 UK 24 Germany 29 Australia 42 12 US Singapore 60 60 81.1 FY18 26.2 23.3 76.0 FY17 23.8 21.5 74.6 FY16 21.8 19.0 69.3 FY15 19.1 17.6 FY14 17.1 242 16.3 Diesel Petrol LPG Source: Oil Consumption from BP Statistical Review 2016, Population from World Bank, Estimates 2015 24 24 Source: Central Statistics Office / PPAC 68.4#25Indian Oil Industry • . Compensation of Under Recoveries Prices of retail sales of LPG and PDS Kerosene Oil are capped by the Government of India (Gol) Under-recoveries determined and compensated provisionally by the Gol 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 October 2014 3.0% • Gasoil - Bulk sales completely deregulated since January 2013 1.5% 0.6% 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 FY15 FY13 FY14 Under-recoveries borne by OMCs have been NIL since FY16 Strategic position in the Indian economy with way to deregulation of fuel sector in the country 25 25#26Bharat Petroleum Thank You