BW Real 500 - HPCL: Delivering Happiness
Hindustan Petroleum Corporation (HPCL) is the second-largest LPG marketer in India that also occupies a leadership position in lubricant sales. It has maintained its position in the BW Real 500 rankings. P.K. Joshi, CMD, explains to its shareholders the high points of the company amid market challenges. Excerpts
On 2022-23 being a challenging year for the sector and HPCL
Crude oil prices continued their rising trend in 2022-23, with benchmark crude prices averaging $96.2 per barrel, the highest since 2013-14. The price volatility was substantial, with crude prices peaking at $123.7 per barrel in June 2022 and reaching a level of $78.6 per barrel by March 2023. Against the backdrop of increased prices and volatility of global crude prices, India’s petroleum product consumption also hit a new record in FY 2022-23, reaching the highest-ever level of 222.3 MMT. HPCL continued to meet the nation’s energy needs even while marketing margins were suppressed for certain petroleum products. I am happy to share that while navigating these challenging environments, gross sales of HPCL registered a growth of 24.7 per cent in 2022-23, rising from Rs 3,72,642 crore in 2021-22 to Rs 4,64,684 crore, thereby reaching a new peak. HPCL achieved its highest-ever annual sales of 43.45 MMT during the period, with a growth rate of 11 per cent. The highest-ever crude throughput of 19.09 MMT was achieved by our refineries, which is 36.7 per cent higher than the 13.97 MMT of crude processed during the previous year.
On the adverse impact of high crude prices on profitability
Profitability for the year was impacted due to exceptionally high international crude oil prices, suppressed marketing margins on select transport fuels, hardening of interest rates and adverse Rs/$ exchange rates, all resulting in a net loss of Rs 8,974 crore for the year as compared to profit after tax (PAT) of Rs 6,383 crore during the corresponding period of the previous year.
On the key highlights for HPCL in 2022-23
HPCL recorded robust growth in sales across various business lines during 2022-23 on the back of a wide array of customer-centric initiatives supported by a strong supply chain network. Market sales have touched a new peak of 43.45 MMT during the year, recording the highest-ever sales for major products. The growth was 11 per cent in comparison with sales achieved in the previous year. In retail business, the year 2022-23 saw the highest sales volume of 28.2 MMT. Sales of petrol and diesel increased by 16.2 per cent and 16.5 per cent respectively and LPG sales growth was 4.9 per cent. The domestic LPG segment gained market share for the seventh consecutive year. During the year, the Industrial & Consumer (I&C) business line recorded overall sales of 4.32 MMT. With the continuing recovery in air travel, HPCL achieved ATF sales of 692.5 TMT during 2022-23, registering a growth rate of 33.1 per cent over the previous year.
On the steps taken to improve and expand the supply chain infrastructure
HPCL significantly expanded the refining and supply chain infrastructure during the year with a capital expenditure of Rs 14,043 crore (including equity investment in its JVCs and subsidiaries) in 2022-23. As part of the Visakh Refinery Modernisation Project (VRMP), a new crude distillation unit (CDU-4) has been commissioned. Three new LPG plants with a combined capacity of 360 TMTPA were commissioned during the year.
