BW Real 500: Pumping Profits

Take this — a surge in its net profits from Rs 1,488.87 crore in FY14-15 to a whopping Rs 4,846.91 in FY15-16; the year was remarkable for state-owned Hindustan Petroleum Corporation (HPCL) in many ways. In a year which remained turbulent for the oil industry and saw low crude oil prices, the Navratna public sector undertaking’s refineries achieved highest ever crude throughput of 17.23 million tonnes — 116 per cent of the total installed capacity — as against 16.18 million tonnes in the previous year.

HPCL in its 2015-16 annual report said, “To meet the growth strategies, apart from capacity expansion of refineries, the corporation has plans for participating in the end-to-end natural gas value chain; vertical integration into profitable petrochemical business; and establishing presence in renewables for ensuring success in the market-oriented scenario and achieving long-term bottom line growth.”

The company’s marketing division recorded its highest ever domestic sales of 33.84 million tonnes during the year ending March, 2016, with a growth rate of 9.3 per cent as against the industry (PSU) growth rate of 7.7 per cent. This led to a market share gain of 0.32 per cent and a total market share of 21.3 per cent in the PSU category. The sales of Motor Spirit (petrol) increased by 14.4 per cent, High Speed diesel by 6.5 per cent, aviation turbine fuel by 20.6 per cent, lubes by 20.4 per cent and bitumen by 26.7 per cent.

Mukesh Kumar Surana, chairman and managing director of HPCL, in the 2015-16 annual report said, “The steps by Government of India (GoI) to improve infrastructure, impetus to manufacturing through ‘Make inIndia’ campaign, reforms in mining, innovative schemes for increasing LPG usage and increased public affordability for private car usage and air travel contributed to the increase in domestic demand.” He added that, “The momentum gained by Indian economy, which grew at 7.6 per cent during 2015-16, making India one of the fastest growing economies in the world, helped in creating a positive economic environment; and points to continued increase in the domestic consumption.” Despite the temporary effects of demonetisation, top officials at HPCL are convinced that growth prospects for the Indian economy will remain bright for almost a decade when it could remain the fastest growing major economy in the world. Planning for that kind of growth is what excites the top brass at HPCL.

To beat the demonetisation woes, the ace petroleum company is working to promote cashless payment across its pumps. As per reports, HPCL is planning to invest Rs 1,200 crore in city gas distribution (CGD) to expand network and build infrastructure.

In the first week of January 2017, credit rating firm Moody’s Investors Service affirmed HPCL’s Rating at “Baa3” with positive outlook. Over the long run, a supporting fuel pricing regime, healthy demand potential in the country and capacity expansion should benefit HPCL. The company has lined up major expansion plans with estimated capital expenditure of about Rs 45,000 crore until 2019-20.

HPCL has successfully implemented Prime Minister Narendra Modi’s Pahal (direct benefit transfer of LPG subsidy) scheme with 4.02 crore of active HP Gas customers joining the initiative as of 31 March, 2016. Under #GiveItUp campaign, over 27 lakh HP Gas customers voluntarily gave up LPG subsidy and the amount thus saved has benefitted over 13 lakh below poverty line families as of 31 March 2016, the company said. Much more is in the pipeline as the Pahal scheme gathers momentum.