During his budget speech, Arun Jaitley declared that the government plans to form a major oil company by merging some of the existing firms in the oil and gas sector to take on international and domestic players.
Hindustan Petroleum Corporation (HPCL), one of the biggest giants in the oil industry in India is likely to merge with Oil and Natural Gas Corporation (ONGC). ONGC is likely to take control of HPCL as a part of the government announcement to create an integrated public sector oil entity. It is likely that a cabinet note will be moved very soon and the government will transfer 51.11 per cent of their HPCL shares to ONGC.
Though the merger is on the cards, HPCL has performed well under the leadership of CMD Mukesh Kumar Surana, who took charge of the company from 1 April 2016.
The state-run company reported a 52.73 per cent growth in its net profit at Rs 1,590.31 crore for the quarter ended 31 December 2016, from Rs 1,041.25 crore a year ago.
The company has sold 34.2 million tonnes of oil products in the year ended in March 2016, an increase of 7 per cent, at a better pace in comparison to other leading oil giants. The volumes of Indian Oil Corporation and Bharat Petroleum Corporation grew by 5.3 per cent and 6 per cent, respectively.
HPCL also signed a Memorandum of Understanding (MoU) between Hindustan Petroleum, GAIL India and Andhra Pradesh government for the proposed greenfield standalone petrochemical complex in Andhra Pradesh.
Over the years, the oil giant has taken some key initiatives, which has impacted its growth. Recently, the organisation has launched HP StartUp portal. The portal is a single window for administering the HP StartUp scheme and collaborating with entrepreneurs, innovators and StartUps leading to commercialisation / business development.
In order to upgrade the refinery with expansion and modernisation as the core objective, Hindustan Petroleum has announced that they are using Honeywell’s technology at Visakhapatnam in Andhra Pradesh.
Boosting MarginsHPCL is planning to spend $8 billion in the next five years to help its six decade old refineries, the objective is to perform at par with the modern processors and private players.
In a 2016 interview with a business daily, Surana said, “Today India has surplus capacity, but demand is increasing.” He added that over the next few years the demand for gasoline will grow by more than 10 per cent and diesel 6 per cent. “Going forward, if we don’t add new capacitates rapidly, we may run out of it.” Surana also said, “These projects will improve distillate yields and improve our margins. This will bring our margin much closer to other complex refineries.”
In an attempt to modernise and add value to core processes, the oil company has chalked out plans for expansion and diversification in the areas of increasing energy demand, technological upgradation and environment management. The ongoing projects include pipelines and refinery modernisation.
HPCL Visakh Refinery is planning expansion from the existing 8.33 MMTPA to 15 MMTPA under VRMP or Visakh Refinery Modernisation Project along with fuel quality upgradation to BS-V and an investment of Rs 20,928 crore.
Recently, HPCL and Greater Visakhapatnam Municipal Corporation (GVMC) signed an MoU to provide Rs 5 crore to their Swachh Visakha Programme under Swachh Bharat Mission. GVMC will use this fund to buy 300 compactor bins and handwash equipment for 200 municipal schools in the city.
BW Reporters
The author is a journalist with BW Businessworld. He primarily covers Retail, Media & Entertainment and Travel & Tourism sectors
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