BW Real 500 - Non Financial #4: BPCL's Fantastic Performance

Despite the delays and uncertainties surrounding its disinvestment, state-owned Bharat Petroleum Corporation (BPCL) has continued to give stellar performance. It recorded its highest ever operating profit of Rs. 22,618 crore and net profit of Rs. 19,042 crore on a standalone basis as against Rs. 2,671 crore and Rs. 2,683 crore, respectively, in the previous year. Even after excluding the one-time gain on the sale of stake in Numaligarh Refinery and other exceptional items, the operating profit stood at Rs. 16,169 crore, boosted by strong refining and marketing and inventory gains, the company said. In the backdrop of such exceptional financial performance, BPCL rewarded its shareholders with the highest ever dividend of Rs. 79 per share (including a one-time special dividend of Rs. 35 per share in final dividend). 

In the Union Budget 2021-22, the government had aggressively pitched for the disinvestment of government entities including BPCL. The sale of BPCL, where the government has decided to sell its entire stake of 52.98 per cent, hasn’t made much progress in the past 10 months or so. In anticipation of a successful disinvestment of BPCL, the government had kept the position of chairman and managing director (CMD) vacant after the retirement of its CMD D. Rajkumar on 31 August 2020. After Rajkumar superannuated, K. Padmakar, Director - Human Resources was given the additional charge of CMD. 

In May 2021, on the recommendation of the Public Enterprise Selection Board (PESB), the Appointments Committee of the Cabinet (ACC) approved the appointment of Arun Kumar Singh, till then its director-marketing, as the new CMD. According to an order from the Department of Personnel & Training, Singh would remain the CMD till the date of his superannuation, i.e, 31 October 2022, or until further orders, whichever is earlier. 

However, during the period under the BW 'Real' 500 study, K. Padmakar was the CMD.

Undeterred by the Pandemic 

Undeterred by the impediments caused by the pandemic, BPCL concentrated on project execution and achieved completion/ commissioning of many projects. The flagship Propylene Derivative Petrochemical Project at Kochi Refinery started commercial production. Augmenting its marketing strength, BPCL commissioned 2,444 new Retail Outlets (ROs) during 2020-21 in the target areas – the highest in a year in the history of BPCL. Completion of the Haldia LPG Import Terminal and Pune Haveli POL Terminal further bolstered the company's marketing infrastructure, Padmakar told the shareholders in his letter. 

However, the pandemic-related demand disruptions did result in a fall in refinery throughput to 26.40 MMT and market sales to 38.74 MMT, declining 17 per cent and 10 per cent, respectively, as compared to last year, which was in line with the industry, the company said. 

The BPCL Group ended FY21 with market sales of 39.05 MMT, as compared to 43.36 MMT during FY 2019-20. During FY21, the BPCL Group exported 2 MMT of petroleum products as against 2.66 MMT during 2019-20. The decline in physical parameters was mainly on account of lower demand due to Covid-19 induced restrictions, it said. 

Very High EPS

During the financial year 2020-21, the BPCL Group achieved gross revenue from operations of Rs. 304,266 crore as compared to Rs. 329,797 crore in 2019-20. The net profit attributable to BPCL stood at Rs. 16,164 crore in FY21 as against Rs. 3,055 crore in the previous year. The BPCL Group recorded basic earnings per share of Rs 81.87 in FY21 as against Rs 15.53 in FY20.

BPCL’s contribution to the exchequer by way of taxes, duties and dividend during FY21 amounted to Rs. 125,583 crore, as against Rs. 97,672 crore in the previous year. Total borrowings of BPCL as on 31 March, 2021 stood at Rs. 26,314 crore, as against Rs. 41,875 crore as on 31 March 2020.