Indian Oil Corporation Ltd. (IndianOil), a Maharatna Company and the nation's largest commercial enterprise as also its highest ranked Fortune 'Global 500' company, has reported an excellent performance for the year 2010-11. Riding on a robust performance driven by the highest ever sales of petroleum products and high capacity utilization of refineries and pipelines, the Corporation has posted significant gains in new business areas of petrochemicals and gas. The year was marked by registering the highest ever turnover of Rs. 3,28,744 crore.
During the year, IndianOil maintained its leadership position in the industry on the basis of superlative performance on all operational indices. The overall sale of petroleum products grew by 3.9% and surpassed the industry growth rate. Capacity utilization of 102% was achieved by the largest refiner of the nation, and pipelines throughput of crude oil & petroleum products grew by 5.4%. The year also witnessed the successful commissioning of some of the Corporation's most ambitious projects such as the expansion of Panipat and Haldia refineries, Naphtha Cracker at Panipat, Hydrocracker at Haldia, fuel quality upgradation facilities, besides the sustained expansion of its marketing and pipeline network.
Financial Performance
IndianOil’s gross turnover (inclusive of excise duty) for the year 2010-11 touched Rs. 3,28,744.27 crore which is the highest ever. The profit after tax was Rs. 7445.48 crore. While the profit for the third quarter was Rs. 1634.76 crore, the same for the fourth quarter was Rs. 3095.16 crore which is an increase of 138.9%. For the year 2010-11, the company’s Earnings Per Share (EPS) stands at Rs. 30.67 as compared to Rs. 42.10 for 2009-10. The total net under-recovery on account of price under-realisation on MS (upto June 25, 2010), Diesel, PDS, Kerosene and Domestic LPG in the financial year 2010-11 is Rs. 3803 crore as compared to a net under-realisation of Rs. 3159 crore in 2009-10. For the year 2010-11, IndianOil has accounted for cash compensation of Rs. 22,604.84 crore, out of which Rs. 11,662.40 crore has been received during the year. In addition, the company has been granted discount of Rs. 16,703.73 crore received from upstream companies and CPCL, as per the under-recovery sharing mechanism. The Board of Directors has recommended a dividend of Rs 9.50 per share. The Gross Refining Margin for April- March 2011 is USD 5.95 per barrel as compared to USD 4.47 per barrel during the previous year and for the fourth quarter, it is USD 7.85 per barrel.
Core Performance
Marketing
IndianOil continued to maintain its dominance in the market clocking the highest ever level of sales at 66.8 million tonnes in the domestic market during the year 2010-11 while the overall POL sales including exports touched 70.8 million tonnes. The year was marked by IndianOil leveraging its formidable supply chain network to make available Bharat Stage-III and IV compliant fuels at pump nozzles across the country. Ethanol-blending of petrol commenced in December 2010. In the high-volume, high-competition direct consumer business, IndianOil continued to be the leader while continuing to focus on penetration into rural areas through Kisan Seva Kendra (KSK) in retail sales. The Corporation commissioned 570 KSKs out of 820 new Retail Outlets commissioned during the year. Large format highway outlets were expanded and strengthened, together with automation of outlets and provision of state-of-the-art dispensing units to enhance customer satisfaction. 145 low-cost Indane distributorships were unveiled in rural areas across 13 states under the Rajiv Gandhi Gramin LPG Vitarak scheme. In LPG, 44 lakh new customers were added during the year and the total customer strength crossed 618 lakh. The bottling capacity was enhanced during the year and the total capacity has touched 5,518 TMTPA. Boosted by KSK outlets, MS and HSD (Retail) registered a robust volume growth. IndianOil's Aviation Service maintained its leadership in all segments of the business, viz., national carriers, defence services, scheduled private airlines and international airlines. Fuel supplies to the new terminal T-3 at Delhi Airport commenced through JVs. New businesses were gained and long-standing business ties with core sector customers were further strengthened.
Refineries
The year 2010-11 saw IndianOil emerge as the nation's largest refiner. With the capacity expansion of Panipat and Haldia refineries, IndianOil's group refining capacity surged to 65.7 million tonnes per annum. During the year, IndianOil's refineries achieved 102% capacity utilization and recorded the highest-ever cumulative crude throughput of 53 million tonnes. A combined distillate yield of 75.4 %wt was achieved despite planned shutdowns and implementation of quality upgradation projects. Sustained efforts to save energy consumption saw overall specific energy consumption come down to the lowest ever level of 59 MBTU/BBL/NRGF (MBN) during the year against 62 MBN in 2009-10. Major projects commissioned during the year include Once-through Hydrocracker at Haldia, capacity augmentation of Haldia and Panipat Refineries, balance units of Naphtha Cracker Project at Panipat, Residue Upgradation and MS/HSD Quality improvement project at Gujarat, Quality improvement projects at Guwahati, Barauni and Digboi, and Sulphur Recovery Units at Haldia and Panipat refineries, etc. To widen the crude oil basket, several new grades were procured from Angola, Congo, Iran and Nigeria.
Pipelines
During the year, IndianOil's network of underground highways expanded to 10,899 km with a capacity of 75.26 MMTPA. The Corporation registered the highest ever operational throughput of 68.5 million tonnes of crude oil and petroleum products. The year was marked by IndianOil's entry into a new era of gas transportation by commissioning Dadri-Panipat Pipeline to supply Re-gassified LNG to Panipat Petrochemical Complex.
During the year, the Bijwasan-Panipat Naphtha Pipeline was commissioned and Rajasthan crude was introduced into the Salaya-Mathura and Mundra-Panipat Pipelines.
Projects
IndianOil is currently implementing projects with an approved cost of over Rs. 45,000 crore. The major ones in the refining segment are - a 15 MMTPA refinery at Paradip; revamp of FCC Unit at Mathura; and MS quality improvement and Diesel Hydrotreater at Bongaigaon Refinery. Some of the major pipeline expansion projects include the Paradip-New Sambalpur-Raipur-Ranchi pipelines; de-bottlenecking of Salaya- Mathura Pipeline; and integrated crude oil handling facilities at Paradip. Other projects include the Butadiene Extraction Unit at Panipat.
Research & Development
IndianOil's R&D continued to add value to different facets of the Company's activities. During the year, 132 formulations were developed and over 80% were commercialised. The Centre holds 212 active patents which includes over 100 foreign patents. Some of the new in-house technologies and catalysts developed include a cost effective process for selective mercaptan removal in ATF production, a new chemical marker to check kerosene adulteration, SERVO Agrospray Oil, and bio-degradable Rubber Spray Oil.
New Businesses
Besides consolidation in core areas, IndianOil took big strides in new businesses during the year 2010-11.
Integration Initiatives
Exploration & Production (E&P)
IndianOil has 13 domestic blocks and 10 overseas blocks. During the year, IndianOil (along with ONGC Videsh Ltd., Oil India Ltd., Repsol and Petronas) signed a Joint Venture Agreement with the Corporacion Venezolana del Petroleo S.A. (CVP) to participate in the Carabobo Project-1 in Venezuela. IndianOil received Petroleum Exploration License from the Gujarat government for one of the two S-Blocks awarded during NELP-VII. Production Sharing Contracts for two NELP-VIII blocks were signed with the Government of India.
IndianOil discovered gas in the Mahanadi offshore block whose commerciality was accepted by MoP&NG and DGH. IndianOil, along with OIL and GAIL, has a participating interest (PI) of 20% each in the block while ONGC is the operator with a PI of 40%. In NELP-IX, the consortium of ONGC (40%), OIL (30%) and IndianOil (30%) has won two shallow water blocks located in the Kerala-Konkan basin.
Petrochemicals
During the year, IndianOil emerged as one of the largest suppliers of Mono-Ethylene Glycol (MEG) in the domestic market clocking a sales volume of 151 TMT and commenced dispatch of petrochemical products such as Polypropylene (PP) and MEG. Linear Alkyl Benzene (LAB) sales clocked 124 TMT, including export of 17 TMT to nine countries. Distribution network for polymers was strengthened by appointing channel partners which include 38 Del Credere Associates-cum-Consignment Stockists and three overseas commission agents - one each in Nepal, Pakistan and Bangladesh.
Indian Synthetic Rubber Limited (ISRL), a joint venture company of IndianOil (50%), TSRC, Taiwan (30%) and Marubeni Corp, Japan (20%) was incorporated to produce Styrene Butadiene Rubber, a specialty product used in tyres and conveyor belts. The 120 TMTPA project, approved at a cost of Rs. 890 crore, is currently underway at Panipat.
Diversification Initiatives
Gas
During the year, gas sales grew by an impressive 20.7% to 2.3 million tonnes from 1.91 million tonnes in the previous year. Gas sourcing and infrastructure got a boost during the year. In addition to purchase of 54 million metric standard cubic metres (MMSCM) of Regassified LNG, a short-term Gas Sales Purchase Agreement was signed with Petronet LNG Ltd. for supply of 1.45 MMSCMD during February-December 2011 and 2.28 MMSCMD during 2012 for internal consumption. In consortium with GSPC, HPCL and BPCL, IndianOil won gas pipeline bids for Mallavaram to Bhilwara and Vijaypur via Bhopal; Mehsana to Bhatinda and Bhatinda to Jammu and Srinagar.
To source gas from West Asia at competitive prices, IndianOil signed the Principles of Cooperation with South Gas Asia Enterprise to jointly develop a deep-sea pipeline from Oman to India. An MoU was signed with Swan Energy Limited to off-take R-LNG from their proposed Floating Storage and Re-gassification Unit at Pipavav in Gujarat.
Beyond Business
As a responsible corporate citizen, IndianOil spends upto 2% of its retained profit of the previous year on such activities through a multi-faceted approach. In the past four decades, IndianOil has supported innumerable social and community initiatives in India ranging from environmental and health-care projects to social, cultural and educational programmes. As part of the Corporation's Social Responsibility (CSR) programme, there is an IndianOil Scholarship scheme, which provides for attractive scholarships to bright students selected on 'merit-cum-means' basis. We have increased the number of academic scholarships from 450 to 2600. The amount of scholarships given to students pursuing professional courses has also been increased. For promotion of sports and games, IndianOil provides sports scholarships to 150 upcoming junior players.
During the year, IndianOil released deposit-free PG connections to the below poverty line families (BPL) in addition to providing the common kitchen facility in rural areas.
Snapshot of Physical Performance (2010-11) -
a) Marketing -
Domestic Sales - 66.8 million tonnes (growth by 3.9%)
No. of new ROs commissioned - 820 including 570 KSKs
No. of new LPG connections - 44 lakh (total no. of Indane customers: 618 lakh)
Indane Distributorships under RGGLVY - 145
b) Refineries -
Group Capacity - 65.7 MMTPA
Crude Throughput - 53 million tonnes (4.53% jump)
Distillate yield - 75.4% wt
Specific Energy Consumption - 59 MBN
c) Pipelines -
Total Length - 10,899 km
Capacity - 75.26 MMTPA
Throughput - 68.5 million tonnes (Products = 26 MMT and Crude Oil = 42.5 MMT)
d) R&D -
Active Patents - 212
No. of formulations developed - 132
e) Petrochemicals -
Sales - 939 TMT (44% growth)
f) Gas -
Sales - 2.30 million tonnes (20.7% jump)
g) E&P - No. of blocks -
Domestic - 13
Overseas - 10
Snapshot of Marketing Infrastructure -
With 36,900 touch points, IndianOil owns 54% of the country's marketing infrastructure. - LPG Bottling Plants - 89 (48.9%)
- Petrol / Diesel Outlets - 19,463 (46.4%) including 3517 KSKs
- LPG Distributorships - 5456 (51.8%)
- Aviation Fuel Stations - 96 (52.8%)
- SKO/LDO Distributorships - 3960 (60%)
- Terminals / Depots - 140 (40.7%)
- Bulk Consumer Pumps - 7780 (88.8%)
(Figures in brackets indicate % share in industry)
Capital Plan Expenditure - - Investment - Rs. 9831 crore
- Planned expenditure during XI plan - Rs. 45,430.3 crore
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