<div>For oil marketing company (OMC) Hindustan Petroleum Corporation (HPCL), 2013-14 was a landmark year. First, Nishi Vasudeva took over as chairperson and managing director of the four-decade-old company, thus becoming the first woman executive in India to head a Navratna public sector undertaking (PSU). Second, it trumped other PSU OMCs in sales growth and recorded the highest level of net profit in the past decade. This helped HPCL retain its sixth position in the BW Real 500 rankings for 2014.<br /><br />The company’s total income rose 8.32 per cent over the previous year to Rs 2,35,599.16 crore while operating profits jumped 41.33 per cent to Rs 6,705.26 crore. Profit after tax (PAT) nearly doubled to Rs 1,080 crore in FY 2014, from Rs 501 crore in FY 2013. <br /><br />The company clocked all-time high sales of 31 million tonnes (mt) for petroleum products, with a growth of 4.1 per cent over the previous year — the highest among OMCs. This growth is noteworthy considering that consumption of petroleum products in India crawled upwards by 1.3 per cent to touch 160 million metric tonnes (mmt) in 2013-14. “This robust performance is due to consistent implementation of best practices in operations, institutionalisation of strategic initiatives and enhanced employee engagement,” Vasudeva said in her maiden address to HPCL shareholders in September. <br /><br />In 2010, HPCL launched its short-term growth plan, Target Shikhar, focused on improving refining profitability, investments in new areas and operational efficiency. Implementation of the plan has helped the company post better results ever since. <br /><br />The key drivers of HPCL’s growth in 2013-14 were timely recoveries from the government and better refining and marketing margins. The company’s pipeline throughput rose to 15.69 mt in 2013-14 from 14.04 mt the year before. Industry observers say HPCL’s gross refining margin (GRM) and capacity utilisation were better than the expected under-$3 a barrel. <br /><br />HPCL’s uncovered losses on selling diesel and cooking gas dropped to Rs 482 crore on account of a Rs 15,215-crore cash subsidy from the government and Rs 16,771 crore in assistance from upstream firms. The government’s decision in January 2013 to allow OMCs to periodically hike diesel prices by 50 paise every month also helped. An appreciating rupee and consistent diesel hikes enabled HPCL pare diesel losses from Rs 8 a litre in January to Rs 2.8 a litre by the end of the financial year. <br /><br />Vasudeva says the company is working on Udaan 2030, a long-term plan focused on cost optimisation and maximising profitability. In this connection, it is implementing two strategic initiatives for central procurement and margin management by integrating end-to-end processes across crude sourcing, refining, storage, distribution and marketing operations.<br /><br />To stem the imbalance between sales and refining capacity and bring newer refineries into action, HPCL is ramping up the capacity of its Visakhapatnam refinery from 8.3 mmt per annum to 15 mmtpa. It is planning to increase the capacity of its Mumbai refinery from 6.5 mmtpa to 10 mmtpa. HPCL is also collaborating with the Rajasthan government to set up a 9 mmtpa refinery-cum-petrochemical complex.<br /><br />The company ventured into international exploration and production (E&P) of petroleum products through its subsidiary, Prize Petroleum, which has acquired a 21 per cent participating interest in two E&P blocks in Australia. Vasudeva says HPCL will focus on strengthening its existing businesses, while leveraging opportunities in E&P and natural gas and diversifying into petrochemicals. Considering its good run and the government’s supportive policies, HPCL may have already taken off on its Udaan 2030 mission.<br /><br />(This story was published in BW | Businessworld Issue Dated 17-11-2014)</div>