IndianOil Performance 2008-09
New Delhi 29-May-2009
Battling odds in a challenging business environment, India's No.1 Fortune 'Global 500' company and flagship oil major, IndianOil notched up another year of sterling performance.
<div align=center><img src=http://www.indianoilexpress.com/NewImages/Thumbnail/Financial09P1.jpg></div>
According to IndianOil Chairman, Mr. Sarthak Behuria, the Corporation's refineries surpassed 100% capacity utilisation and clocked the highest ever throughput of 51.4 million tonnes. Breaching the 10,000 km mark in length, the pipelines network registered the highest ever operational throughput of 59.5 million tonnes of crude oil and petroleum products.
During the year 2008-09, IndianOil's sales volume registered a growth of 5.6% and went up to an unprecedented 62.6 million tonnes of petroleum products as compared to 59.30 million tonnes during the previous year. Sales of natural gas also went up to 1.7 million tonnes in 2008-09. In addition, product exports rose to 3.64 million tonnes from 3.38 million tonnes in the previous year.
<img src=http://www.indianoilexpress.com/NewImages/Thumbnail/Financial09P2.jpg align=left>Among new businesses, Natural Gas marketing and Petrochemicals generated revenues of Rs. 2425 crore and Rs. 2760 crore during the year 2008-09. In addition to IndianOil earning international recognition as a technology provider, the year also marked IndianOil winning operatorship rights of two Type-S oil & gas blocks in Cambay Basin under NELP-VII.
Intensive efforts at corporate restructuring and streamlining operations during the year 2008-09 also resulted in the merger of refining subsidiary, Bongaigaon Refinery and Petrochemicals Ltd. (BRPL) with IndianOil.
<B><u>Core Performance</u></B>
<b>Financial Performance</b>
IndianOil’s gross turnover (inclusive of excise duty) for the year 2008-09 reached a new high of
Rs. 2,85,337 crore up by 15.3% as compared to Rs. 2,47,457 crore in the previous year. The Profit After Tax was Rs. 2,950 crore.
For the year 2008-09 the company’s Earnings Per Share (EPS) stand at Rs. 24.30 as compared to
Rs. 58.39 for 2007-08. The total net under-recovery on account of price under–realisation on petrol, diesel, PDS Kerosene and domestic LPG in the financial year 2008-09 is nil. This is in comparison with a net under-realisation of Rs. 9,774 crore in 2007-08.
For the year 2008-09, IndianOil has received Special Oil Bonds worth Rs. 40,383 crore from the Government of India in addition to Rs. 18,210 crore received from upstream companies towards subsidy-sharing.
The Board of Directors has recommended dividend of Rs. 7.50 per share.
The Gross Refining Margin for April-March 2009 is USD 3.69 per barrel as compared to USD 9.02 per barrel during the previous year. Refining margins during the current year is lower mainly due to fall in the international crude oil price resulting in inventory losses.
<b>Marketing</b>
Catering to almost half of the Indian market, IndianOil maintained its dominance in the market place and clocked the highest ever level of sales during the year 2008-09. Domestic sales grew by 5.6% from 59.30 million tonnes in the previous year to 62.6 million tonnes in the year 2008-09. This includes 1.7 million tonnes of natural gas.
Sales volume and market shares improved in almost all the segments in marketing. In the high-volume, high-competition direct consumer business, sales grew by 2% and long-standing business ties with core sector customers such as the Defence Services, Railways, State Transport Undertakings, etc., were further strengthened.
Retail sales in MS (petrol) and HSD (diesel) registered a robust growth of 14.4% and 12.2% respectively, with expansion of the countrywide network to 18,278 petrol/diesel stations (retail outlets). This includes commissioning of almost 500 special-format Kisan Seva Kendra (KSK) outlets in rural markets during the year, taking their total to 2,546.
Due to innovative initiatives, strong brand communications and sales promotion campaigns conducted during the year, IndianOil's branded fuels - XTRAPREMIUM petrol and XTRAMILE diesel - maintained their firm leadership status, with a market share of 48.6% and 59.6% respectively among branded fuels in the market. XTRAPREMIUM and XTRAMILE are now available at 6,446 and 9,256 retail outlets of IndianOil respectively.
The usage of XTRAPOWER fleet card by fleet owners grew by 24% as compared to the last year, with transactions of over Rs. 12,000 crore. More IndianOil outlets were upgraded to superior service standards of XTRACARE during the year, taking their total to over 2100.
Extending the reach of environment and user-friendly Indane LPGas (Liquefied Petroleum Gas) to more households, IndianOil enrolled 21 lakh new LPG customers during the year 2008-09, raising the total number of Indane households to nearly 529 lakhs. Non-domestic packed LPG sales recorded a 23% growth while bulk LPG sales registered a 59% growth over the previous year. In an innovative measure, 47.5 kg LPG cylinders were launched to facilitate bulk LPGas supplies. To cater to the growing demand of Autogas (LPG), 66 Auto LPG Dispensing Stations were commissioned during the year taking their tally to 223. Autogas is now available across 20 States and Union Territories across the country.
During the year, IndianOil's market share in the finished lubes segment grew by 2.3%. <i>SERVO</i> lube network was also expanded to 210 auto stockists, 72 industrial stockists, nine marine stockists and 26 CFAs. IndianOil's world class <i>SERVO</i> lubricants were formally launched in Oman and exports commenced to wholly owned subsidiary IOC Middle East FZE and Toyota, Oman.
Despite a drop in overall ATF volumes due to the downturn in the aviation business during the year, IndianOil continued to be the market leader in aviation with growth in market share from 62.5% in the previous year to 63.3% in the year 2008-09. Several new businesses of international airlines were garnered during the year.
<b>Refineries </b>
For the year 2008-09, IndianOil's eight refineries achieved the highest ever throughput of 51.4 million tonnes and 103.4% capacity utilisation, registering a 8.4% growth in crude oil processing over the previous year. As a result of sustained efforts in energy conservation, IndianOil refineries clocked the lowest overall specific energy consumption of 64 MBTU/BBL/NRGF (MBN) during the year as against 67 in 2007-08.
Stream-sharing between group refineries ensured better optimisation, capacity utilisation, value addition and enhanced gross refining margins. In a significant measure towards capacity building and upgradation, new projects worth almost Rs. 32,000 crore were approved during the year. These include a state-of-the-art refinery at Paradip (Rs. 29,777 crore), and Motor Spirit Quality Improvement projects at Barauni (Rs. 1492 crore), Guwahati (Rs. 372 crore) and Digboi (Rs. 356 crore) refineries.
To widen the crude oil basket, several new grades were procured from Angola, Malaysia, Gabon, Congo, Nigeria, Libya and Egypt. Continuing with direct chartering of ships for petroleum imports, IndianOil imported a record quantity of 47.8 million tonnes of crude oil in 2008-09 as against 46.11 million tonnes in 2007-08. During the year, IndianOil entered into term contracts with Angola and Brunei for import of low sulphur crude oil and over 95% of the LPG imports were finalised through term contracts.
<b>Pipelines</b>
During the year, IndianOil's network of underground highways breached the 10,000 kilometre mark and registered the highest ever operational throughput of 59.5 million tonnes. Compared to the previous year, the crude oil pipelines registered a 6.7% growth at 38.2 million tonnes. The year was marked by the commissioning of a record number of pipeline projects, the foremost being the Paradip-Haldia crude oil pipeline and IndianOil's first Panipat-Jalandhar LPG pipeline. Other projects commissioned during the year include the Koyali-Ratlam product pipeline, ATF Pipeline from CPCL (Manali) to Chennai AFS and ATF pipeline to the New Bengaluru International Airport.
<b>Projects</b>
IndianOil is implementing projects of over Rs. 60,000 crore currently. Major ones among them are: a 15 MMTPA refinery at Paradip (Rs. 29,777 crore); capacity augmentation of Panipat Refinery (from 12 to 15 MMTPA, Rs. 1007.83 crore); MS quality improvement projects at Panipat (Rs. 1,131 crore), Barauni (Rs. 1,492 crore), Guwahati (Rs. 372 crore), Digboi (Rs. 356 crore) and Mathura (Rs. 348 crore) refineries; residue upgradation and MS/HSD quality improvement project at Gujarat Refinery (Rs. 5,882 crore); Diesel quality improvement & capacity expansion at Haldia Refinery (from 6 to 7.5 MMTPA, Rs. 2,869 crore); a Naphtha Cracker and Polymer complex at Panipat (Rs. 14,439 crore); and new product pipelines from Chennai to Bengaluru (290 km, Rs. 273 crore), from Dadri to Panipat (130 km, Rs. 298 crore), and branch pipeline from KSPL, Viramgam to Kandla (217 km, Rs. 349 crore).
<b>Research & Development</b>
IndianOil set up the nation's first commercial Hydrogen-CNG dispensing station at Dwarka, Delhi as part of the Corporation's efforts to promote Hydrogen as an alternative fuel.
186 lubricant formulations were developed during the year, of which 153 were commercialised. 47 approvals were also received from OEMs (Original Equipment Manufacturers). 17 new patents were filed, of which 10 were approved. This takes the total number of patents to 214, including 113 international patents.
IndianOil has tied up with National Renewable Energy Laboratory (NREL), US, for a pilot project to produce second-generation bio-fuel from cellulosic biomass or degradable agricultural waste or wood. In order to explore sources of production of bio-fuels, research programmes were taken up during the year on bio-Hydrogen, algal fuels and lignocellulosic ethanol.
<b><u>New Businesses</u></b>
Besides consolidation in core areas, IndianOil took big strides in new businesses during the year 2008-09.
<b>Integration Initiatives</b>
<u>Exploration & Production (E&P)</u>
During the year, IndianOil was awarded 100% participating interest and operatorship of two Type-S blocks in-Cambay Basin in the seventh round of NELP. This was in addition to the deepwater block in the KG basin awarded to the consortium of IndianOil (20% participating interest), ONGC and GSPC. Expanding its E&P portfolio, IndianOil also entered into a farm-in agreement with Reliance E&P DMCC for 12.5% participating interest in the deepwater Block-K in Timor-Leste.
Among overseas oil & gas blocks, IndianOil signed Production Sharing Agreements for Blocks 82 & 83 in Yemen (awarded earlier) that were approved by the Yemeni Parliament. IndianOil holds 15% participating interest in each block along with other partners, viz., Medco Energi, Kuwait Energy and OIL.
In Libya, an Exploration & Production Sharing Agreement was signed for onland exploration of Areas 95-96 in Libya (awarded earlier) and ratified by the General People's Committee of Libya. IndianOil holds 25% participating interest in the block along with other partners, viz., Sonatrach and OIL. During the year, the National Iranian Oil Company conveyed its acceptance of commerciality of the gas discovery in Farsi block (awarded earlier) in which IndianOil holds 40% participating interest along with other partners, viz., OVL and OIL.
<u>Petrochemicals</u>
During the year, IndianOil consolidated its LAB business as a major supplier to key national and international players in the detergent industry. Despite market downturn and shortage of raw material, sale of 1,26,000 tonnes (domestic and exports) of IOCLAB was registered during the year.
The PTA business was also expanded to cater to all major domestic customers and clocked a sales volume of 4,08,000 tonnes. For the year 2008-09, the petrochemicals business turned in Rs. 2760 crore in revenue.
Work on IndianOil's biggest petrochemicals investment - the over Rs. 14,000 crore Naphtha Cracker and downstream polymer units - is underway at Panipat for commissioning by the year end. The Naphtha Cracker has a capacity of 8,57,000 tonnes per annum (TPA) of Ethylene and 6,00,000 TPA of Propylene. In addition to 3,25,000 TPA of Mono Ethylene Glycol and 1,40,000 TPA of Butadiene, the unit can also produce 6,50,000 TPA of Polyethylene and 6,00,000 TPA of Polypropylene.
<b>Diversification Initiatives</b>
<u>Gas</u>
IndianOil sold 1.7 million tonnes of R-LNG during 2008-09, thus generating a turnover of Rs. 2,425 crore (growth of 16.1% over previous year). During the year, the Corporation has tied up for sourcing of additional quantity of gas and renewed gas sales agreements with existing customers. To consolidate the city gas distribution (CGD) business, the Corporation has signed MoUs with several players, which include Adani Energy, Reliance Gas Corporation, OIL and ONGC.
IndianOil has also entered into franchise agreements with CGD players such as Indraprastha Gas Ltd., Mahanagar Gas Ltd., Adani Energy Limited, GEECL, SITI Energy and GSPC Gas Ltd. to sell CNG through its retail outlets.
<u>Bio-fuels</u>
To straddle the complete bio-fuel value chain, IndianOil formed a joint venture with the Chhattisgarh Renewable Development Authority (CREDA). IndianOil and CREDA hold 74% and 26% equity in IndianOil CREDA Biofuels Ltd. that was formed for carrying out farming, cultivating, manufacturing, production and sale of biomass, bio-fuels and allied products and services. A pilot project of jatropha plantation on 600 hectares of revenue wasteland is underway in Jhabua district in Madhya Pradesh to ascertain the feasibility of revenue land-based commercial biodiesel units and to develop benchmarks for plantation costs and output.
IndianOil has also signed an MoU with M/s Ruchi Soya Industries Ltd. to take up contract farming on one lakh hectare of private and panchayat wasteland in the state of Uttar Pradesh.
<b>Other Diversification Initiatives</b>
IndianOiI has forayed into wind energy business with the commissioning of a Rs. 130 crore, 21 MW wind power project in the Kutch district of Gujarat. The cumulative power generation from the 14 wind turbine generators has crossed 159 lakh KW since commissioning in January 2009. IndianOil has also commissioned two pilot solar lantern charging stations at its Kisan Seva Kendras at Sathla near Meerut and Chokoni near Bareilly.
<u>Consultancy</u>
As part of overseas consultancy, the technical services agreement and manpower secondment agreement with the Emirates National Oil Company (ENOC), Dubai, were extended for the 12th and 11th consecutive years respectively. Four IndianOil engineers were deputed to Kenya through Petroleum India International for consultancy jobs at the Kenya Pipeline Company. Two engineers of Aden Refinery were trained on RFCC Unit at Haldia Refinery. For the first time, SAP implementation / IT consultancy was provided in Sri Lanka. Consultancy on pipelines was provided to Greater Nile Petroleum Operating Company (GNPOC), Sudan.
<b>Globalisation Initiatives - Performance of Overseas Subsidiaries </b>
<u>IndianOil (Mauritius) Ltd. (IOML)</u>
In the year 2008-09, IOML's sales grew by 11.5% - to 174 TMT as compared to 156 TMT in the last fiscal. The IOML board has declared a maiden dividend of 4% to the parent company IndianOil.
During the year 2008-09, IOML's overall market share touched 21.6% while maintaining its numero uno position in aviation business with a 35% market share. With the commissioning of four filling stations during the fiscal under consideration, the total number of ROs has gone up to 17.
<u>Lanka IOC Plc (LIOC)</u>
In a thumping recognition of its growing footprint in Sri Lanka, LIOC has been ranked No. 1 among Sri Lanka's leading listed companies for the financial year 2007-08 by the nation's leading business magazine - Lanka Monthly Digest.
LIOC achieved a market share of about 40% in a highly competitive bunker market, catering to all types of bunker fuels and lubricants at all ports of Sri Lanka, viz., Colombo, Trincomalee and Galle. It is the major supplier of lubricants and greases to the three arms of the Defence services of Sri Lanka.
LIOC's market share in petrol increased from 20.2% in the year 2007 to 24.8% in 2008. The overall market share too increased to 16.9% in 2008.
<u>IndianOil Middle-East FZE (IOME)</u>
It is IndianOil's subsidiary in the Middle East and is mainly into blending and marketing of <i>SERVO</i> lubricants and marketing of petroleum products in the Middle East, Africa and CIS countries. During 2008-09, 107 flexi tanks of base oil were supplied as compared to 25 in the previous year. Finished lubes were exported to Oman, Qatar, Yemen, Bahrain, UAE and Nepal. IOME achieved financial break-even in the year 2008-09.
