Storming ahead in troubled waters
New Delhi   31-Mar-2009
The India growth story so far and even henceforth rests on the fortunes of several corporations. IndianOil is definitely one of them. The sheer magnitude of operations and its reach make it a critical element in India's growth prospects. Consider this, in the financial year 2007-08, the IndianOil group sold 59.29 million tonne of petroleum products, including 1.74 million tonne of natural gas, and exported 3.33 million tonne of petroleum products. It, along with its group of companies, owns and operates 10 of India's 19 refineries with a combined refining capacity of 60.2 million metric tonne per annum (or 1.2 million barrels per day). These include two refineries of subsidiary Chennai Petroleum Corporation Ltd (CPCL) and one of Bongaigaon Refinery and Petrochemicals Limited (BRPL). The corporation's cross-country network of crude oil and product pipelines, spanning about 9,300 km is the largest in the country. In fact, 2007-08 saw the culmination of a major restructuring exercise in the form of a seamless merger of the marketing subsidiary, IBP, with IndianOil. "Integration of the countrywide assets and operations of both the companies led to the formation of a larger and more formidable marketing network of over 34,000 touch points for IndianOil," said Mr. Sarthak Behuria, Chairman, IndianOil, in the annual general meeting. "A similar exercise is underway for the merger of the refining subsidiary, Bongaigaon Refinery and Petrochemicals Ltd, which will bring synergy in our refining operations" he added. IndianOil's revenues for the year 2007-08 reached a new high of Rs 2,47,479 crore, up by 12.1 % as compared to the previous year. The net profit was Rs 6,963 crore, after considering the compensation of Rs 18,997 crore in the form of the special oil bonds issued by the Government of India. The total net under-recovery on account of price under-realisation on sale of the four, sensitive products in the year 2007-08 was Rs 9,774 crore, after considering the oil bonds and burden sharing by upstream companies. Among new businesses, natural gas marketing and petrochemicals together generated revenues of nearly Rs 4,700 crore for the year 2007-08. The petrochemical plants set new records in production during the year to match increased sales. The year also marked expansion of the corporation's upstream portfolio to over 20 oil and gas assets in India and abroad. In fact, IndianOil has been creating assets internationally as well and most of them are present in value-added product segments. IndianOil (Mauritius) has developed its presence in the competitive aviation business. Lanka IndianOil looks at widening the lubricants business. Similarly, IndianOil Middle East FZE concentrates on blending lubricants and marketing petroleum products in the Middle East, Africa and CIS countries. The combined turnover of all subsidiaries for the year 2007-08 was Rs 41,831 crore, registering a growth of 11.2% over the previous year. Their combined profit was Rs 1,524 crore, an increase of 109% over the previous year. The joint ventures also fared well during the year, with their aggregate turnover reaching Rs. 8,245 crore, representing a 31.6% growth over the previous year. Their combined profits registered a 64% jump to Rs 595 crore Going ahead there are ambitious plans. The management envisages investments of over Rs. 50,000 crore currently and plans to take the group refining capacity from 60.2 to 80 million tonne per annum by the year 2011-12. Similarly, IndianOil will add about 4,000 km of new pipelines by the year 2012. "In this, we see gas pipelines as a high-growth area," said Behuria. He also mentioned, "IndianOil's new businesses assume great significance for its growth plans for the future, with its current marketing margins taking a hit on account of soaring prices of crude oil in the international market and incomplete pass-through of product prices to the customers."