BPCL: Eye On The Future

<p><em>BPCL is betting big on Project Sankalp, as it will take the company to the next giant leap</em><br><br>State-run oil refiner Bharat Petroleum Corporation (BPCL) is preparing for the future with an ambitious project that envisages growth beyond fuel and across boundaries. The country’s second-largest oil and gas marketing company recently announced the Rs 40,000-crore venture, dubbed Project Sankalp, which aims at transforming BPCL into a more customer-centric organisation, with a focus on petrochemicals, alternative energy, infrastructure, research and development, and an international presence.<br><br>Employees at all levels have contributed ideas for Project Sankalp, and helped identify actionable goals with a time frame of five years. The aim is to make BPCL a fully-integrated petroleum-to-petrochemicals giant, and to raise refining capacity from 30 million tonne to 50 million tonne. The company, which continues among the country’s top 10 high-performing companies in the latest BW Real 500 survey, crossed the Rs 5000-crore mark in profitability for the first time. Its net profit for 2014-15 was around Rs 5,084.5 crore, up 25 per cent from Rs 4,061 crore a year ago, on total revenues of Rs 2,53,255 crore.<br><br>The company started the current financial year with a stellar performance, with its net profit at around Rs 2,377 crore in the first quarter. It notes that this was despite the softening of international crude prices and increased competition in diesel after price deregulation. “As we stand on the threshold of rapid growth of the economy, there are ample opportunities to grow and spread our wings, and Project Sankalp is the company’s resolve to take itself to the next giant leap,” chairman and managing director S. Varadarajan told BW Businessworld after its latest annual general meeting on 9 September.<br><br>As part of Project Sankalp, BPCL plans to set up a petrochemicals complex in Kochi. With environmental clearances in place and a commitment for a Rs 4,000-crore loan from SBI, work on the project is likely to start soon, and is expected to be completed by 2018.<br><br>Earlier, BPCL and LG Chem had signed an agreement in July 2012 to set up a super absorbent polymers (SAP) plant in Kochi. BPCL had tried unsuccessfully to buy the critical technology to make speciality propylene derivatives and SAP, as currently only five companies in the world have this technology. BPCL says it is still in talks with all the players, and hopes to seal a joint venture deal soon. But even a delay on this front would not affect overall work on the project, said a senior executive at BPCL’s Kochi refinery. The upcoming petrochemical facility, adjacent to the refinery, will produce 250 MT of speciality propylene derivative products annually. At present, the entire requirement is imported.<br><br>The change is imperative. In a scenario where competitive pricing and softened crude oil prices are in play, public-sector oil companies are likely to face bigger challenges than before, and need to be nimble to adapt.<br><br><em>— C. H. Unnikrishnan</em><br><br>(This story was published in BW | Businessworld Issue Dated 19-10-2015)</p>