Oil public sector undertakings (PSU) are back on a firm footing after the liberalisation of the market and a favourable crude pricing regime. Among these, Bharat Petroleum Corporation (BPCL) has proved itself a cut above the others. Taking advantage of positive market dynamics and using the company’s efficient management practices, the country’s second largest oil refining and marketing company has made it to the top league of India’s fastest growing companies.
With a four-year average of 11.9 per cent CAGR in sales and 34.7 per cent growth in net profits during 2011-2015, BPCL was the third fastest growing company in India in BW Businessworld’s 2016 list of super heavyweights. The ranking reflects not only on BPCL’s growth story but also its vision and the journey ahead.
Chairman and managing director S. Varadarajan had recently announced a couple of key projects for its journey of transformation. The new Rs 32,500-crore investment plan includes huge capacity upgradation and expansion of the company’s existing refineries. BPCL’s Project Sankalp will make the company a fully integrated petroleum-to-petrochemicals giant, raising its refining capacity from 30 million tonnes per annum (tpa) to 50 million tpa over the next few years.
Expansion plans include the Rs 3,500 crore project at the Bina refinery that will take its refining capacity to 7.8 million tpa a year by 2018 from the current 6 million tonnes. Another Rs 20,000 crore is slated for its Kochi refinery to expand capacity from 9.5 million tpa to 15.5 million tpa. This expansion will make BPCL’s Kochi refinery the largest public sector refinery in India. At BPCL’s Mumbai refinery, capacity would go up from 12 million tpa to 14 million tpa. The company will also invest Rs 10,000 crore on its Numaligarh refinery in Assam, to expand its capacity from 3 million tpa to 9 million tpa.
BPCL’s foray into the upstream sector through its exploration and production arm, Bharat Petro Resources (BPRL) has yielded results with 17 discoveries, including eight in Mozambique and six in Brazil.
Top PerformerThe company, which has continued to be among the country’s top ten high-performing units, had crossed the Rs 5,000-crore mark in profitability for the first time in fiscal year 2015. Its net profit for 2014-15 was Rs 5,084.51 crore, up 25 per cent from Rs 4,061 crore in the previous year, on total revenues of Rs 2,37,905 crore. It also started the current financial year with a stellar performance, with its net profit touching Rs 4,883 crore as on 31 December 2015.
BPCL’s efficiency norms have historically reflected in its ratings. Independent analysis has shown that in terms of return on equity, assets and capital employed, it is ahead of its peers. A recent analysis rates BPCL’s return on equity (ROE) and return on assets (ROA) at 21.31 per cent and 6.06 per cent, higher than the industry average of 8.80 per cent and 1.71 per cent, respectively. It’s return on capital employed (ROCE) is 18.47 per cent, more than double its peers’ average of 8.71 per cent.
Company officials, in the most recent analysts call, also revealed that BPCL’s financial performance during the first nine months of fiscal 2016 had improved with the throughput touching 17.90 million tonnes, compared to 17.25 million tonnes during the period in 2014. With respect to GRM (gross refining margin), it was $6.69 per barrel, compared to $2.08 during April-December 2014.
unni@businessworld.in; @unni_ch
BW Reporters
Unnikrishnan is currently Senior Associate Editor with BW Businessworld at its Mumbai Bureau. During his two decades long journalistic career, he has received several media awards and recognitions. His articles on healthcare, life sciences and intellectual property rights (IPR) have been republished by several international blogs and journals.
