BW Real 500: At An Alltime High

India’s oil and gas sector scaled the best ever performance in the year 2016, while all others were reeling under some or other market uncertainties. Despite volatile and unpredictable economic and market conditions, the oil refiners and marketers delivered their best, and the country’s second largest public sector refiner Bharat Petroleum Corporation (BPCL) had its profit at an all-time high.

The corporation, with its asset base touching Rs 93,241 crore, and its sales and profit at Rs 1,88,651 crore and Rs 8,463 crore respectively, is in the top 10 of BW Real 500 again.

“It has been a year when the company crossed several milestones,” says P. Balasubramanian, finance director of the corporation, in an exclusive interview with BW Businessworld.

The phenomenal results have also enabled BPCL to meet the stringent criteria set by the government of India for classification as a ‘Maharatna’ company this year.

“Certainly, the record profits have been the result of strong all-round performance. While the refineries at Mumbai and Kochi have delivered robust gross margins, the marketing business units have achieved the best in a highly competitive environment with sales volume growing at 6 per cent over the previous year,” he says.

In the year under review, BPCL’s Numaligarh refinery registered an all-time high profit at Rs 1,224.35 crore, and its other two refineries Bina and Bharat Oman ended the year with a profit for the first time since their commissioning.

The corporation’s earnings per share crossed the 3-digit mark this year at Rs 102.78. It also announced the highest ever dividend in its history. The capital market had also put its confidence in the stock with the market capitalisation crossing Rs 87,000 crore.

“In our industry, market volume and the cost efficiency at refineries are the two most crucial factors that decide the performance and even sustainability,” admits Balasubramanian.

In this context, its investments of substantial amounts of capital expenditure and execution of high-value complex projects were significant achievements. Its integrated refinery expansion project (IREP) at Kochi refinery, which is by far the largest single project to be undertaken by the corporation so far, is currently nearing completion and it will be commissioned on schedule. Besides, the corporation has also started work on its propylene derivatives petrochemicals project at Kochi refinery, which can generate additional revenue.

During the year, the capital expenditure of the BPCL group was Rs 11,360 crore, which was 14 per cent more than the previous year. The corporation has already set its ambitious capital expenditure plan for the next five years, involving an outlay of around Rs 1,00,000 crore. Its acquisition of refineries in Russia jointly with Oil India and Indian Oil Corporation, and the development of Mozambique assets too are seen as strategic moves to consolidate its resource base for the future.

“These would also contribute significantly towards the country’s efforts in enhancing its crude oil security, apart from enabling the corporation to commence revenue generation in a significant manner,” says the finance head.

But more importantly, it’s the corporation’s new market initiatives aimed at attracting more footfalls into its retail outlets that will help it in steering ahead of the growing competition, especially the more efficient refiners in the private sector. BPCL is also taking proactive steps to go ahead with cashless transactions across its dealer network.