BPCL: Carving A New Path

In the last one year, government-owned Bharat Petroleum Corporation (BPCL) has worked under two different leaders. Till 30 September, S. Varadarajan worked as CMD of the company and, after his retirement, D. Rajkumar took over from 1 October.

Taking advantage of both the leaders’ experience and using the company’s efficient management practices, one of the country’s largest oil refining companies has made it to the top league of India’s fastest growing companies.

The organisation had taken some key decisions at various stages in the last one year which shows the positive transformation of the company.

At the annual general meeting of BPCL in September 2016, the oil giant announced the raising of Rs 2000 crore during the current financial year through a private placement of secured non-convertible debentures. BPCL also entered into an agreement for acquiring a 21 per cent stake on a fully diluted basis in the share capital of FINO Pay Tech for a consideration of Rs 251 crore in an all-cash deal.

BPCL’s objective behind the FINO Pay Tech deal was to leverage the marketing network and participate in the financial inclusion process going on in the country. The top leadership believes this offers convenience to the customers based on the evolving trends in the payments arena.

The government-owned oil company rolled out various customer service initiatives in its core retail fuels business using emerging technology solutions.

Under its subsidiary of Bharat Petro Resources, BPCL also acquired 23.9 per cent shares of the charter capital of Russian company, JSC Vankorneft. In order to consolidate their presence in the pipeline sector, BPCL increased its stake in the subsidiary company Petronek CCK by buying out their 26 per cent stake. BPCL’s stake increased to 99.96 per cent from 73.96 per cent at a total cost of Rs 78.60 crore.

The Assessment: Quarterly Results
In the third quarter, BPCL has posted a jump of 47 per cent in net profit of this fiscal year. The net profit of the state-run company was at Rs 2,271 crore compared to Rs 1,545.5 crore in the same quarter of last year’s fiscal. It has registered record sales with an increase of 20 per cent. The total revenue of the petroleum company was Rs 64,095.65 crore against Rs 53,237 crore in last year’s fiscal for the third quarter.

Understanding the value of its store’s presence, BPCL is all set to foray into the retail chain space. Media reports suggest that Tata Group’s retail venture, Trent Hypermarkets, with UK-based retailer Tesco that operates Star Bazaar Hypermarkets and Star Daily supermarkets, is likely to expand 200 stores across 20 cities by the year 2018. These stores will be in partnership with BPCL.

This move is part of BPCL’s ‘Shopongo’ initiative which was launched in early 2017. It will offer various services such as home delivery services for food and groceries. With this deal, Trent Hypermarkets will open its Star daily stores at the BPCL outlets.

Very soon, the sector will see a tremendous change following the government’s announcement of merging oil firms to create a gaunt integrated oil and petroleum company.

In a recent development, the oil ministry has asked state oil firms to formulate a road map for creating integrated firms. Media reports cited that oil secretary, Kapil Dev Tripathi had met the chairman of state oil firms and asked them to submit their plans for integration within weeks. In their plans, companies have to point out their preference of company with which they want to be combined and what collaboration they will bring.