Speech of Chairman-IndianOil at 62nd Annual General Meeting
New Delhi 27-Aug-2021
Chairman, IndianOil, Mr S M Vaidya’s Speech
At
IndianOil’s 62nd Annual General Meeting
27th August 2021, New Delhi
Dear Shareholders of IndianOil,
Welcome to IndianOil's 62nd Annual General Meeting! I trust that you and your families are in the best of health and cheer. Just a few days back, we celebrated our 75th Independence Day, and while remembering the great leaders whose sacrifice and vision built an inclusive and prosperous nation, we also renewed our pledge for creating a shining India of tomorrow. So, at the outset, allow me to dedicate this IndianOil AGM to the billion plus Indians, whose hopes and aspirations are the driving force that keeps your Company going against all odds. Celebrating this diamond milestone, our Hon'ble Prime Minister shared an ambitious energy vision for India in his Independence Day speech, that envisages making the country energy independent, by the 100th year of independence in 2047. This underlines the special responsibility that IndianOil bears on its shoulders as India's leading Energy enterprise. Please be assured, that your Company is geared up to embrace that aspirational challenge and excel as a global energy major.
Let me begin by sharing my conviction about IndianOil and its future. Built on solid fundamentals, your Company is poised for an exponential growth. Our aspirations are validated by the impressive run we have witnessed in the recent past, in terms of financial and performance numbers posted, business benchmarks set, and innovative streaks pursued. 2020-21 has probably been the most exceptional year that the world has witnessed in our lifetimes. The pandemic has shaken up economies and business landscapes, and balance sheets around the globe have been in the doldrums. But I am happy to say that your Company went all out to convert the current challenges into future growth opportunities. We realised that in a couple of decades from now, the economic upheaval caused by the pandemic will be just a speck in the larger scheme of the universe. Thus, the onus is on us to break barriers, overcome challenges and pursue excellence while negotiating rough seas. We did exactly that by keeping our esteemed Customers at the centre of all our business goals.
I am very happy to share with you that these focussed efforts were rewarded by record profits of Rs 21,836 crore that we registered last year despite the ravages of the pandemic. The gross refining margin (GRM) during the year rose to US$ 5.64 per barrel (bbl) as compared to US$ 0.08 per bbl in the previous financial year. Let me also add that with the recovery in the overall demand, refining and other related operational parameters have demonstrated an even more pronounced turnaround compared to the previous year. For the first quarter of this fiscal, IndianOil achieved a refinery run of 88.6% as compared to 68.5% in Quarter 1 of FY 2020-21. As I say this, the sales volume of petrol has already crossed pre-Covid level, with diesel likely to reach there in the next 2-3 months, say by Diwali.
Speaking about India's energy future and the related opportunities, forecasts by various agencies see Indian fuel demand climbing to 400-450 million tonnes by 2040 from the present 250 million tonnes. This offers enough legroom for all forms of energy to co-exist. In fact, to cater to that demand surge, we are aggressively rolling out new projects. These translate into refining capacity expansion of over 25 million metric tonnes per annum (MMTPA), including CPCL, and an investment commitment of close to Rs one lakh crore over the next 4 to 5 years. To strengthen your Company's long-term future, we are focusing on optimally integrating current refining processes to yield more chemical products per barrel of oil. This will intensify Petrochemical and Lubricant integration leading to a diversified product portfolio and attain profit maximisation. In fact, integration projects, like the upcoming Styrene Monomer Project at Panipat or the Lube Integration Project at Gujarat Refinery will also reduce India's import dependence and strengthen the promise of an Aatmanirbhar Bharat. Let me also underline here that our focus will be on green energy to power new projects and refinery expansions.
Over the past decade, IndianOil has diligently built its new businesses, particularly, petrochemicals and natural gas marketing, to achieve high levels of integration with the core verticals. The Company’s upstream forays into Exploration & Production have also yielded significant results in the form of a sizeable portfolio of oil & gas assets in India and abroad.
IndianOil is charting its course as a future-ready global energy giant and we are working on a range of scalable alternative energy options to realise the vision. Various solutions around CNG, LNG, H-CNG, Biofuels, Hydrogen and e-mobility are being explored to meet the emerging energy needs of the nation.
In the electric mobility sector, the ‘IOC Phinergy Private Limited’ has been formed between IndianOil and the Israeli company Phinergy, to commercialise Aluminium-Air Battery technology for the Original Equipment Manufacturers in India. Leading automobile companies have shown keen interest in the technology and prototype integration and field trials are expected to commence soon. This collaboration has potential advantages for India, including a viable and affordable e-mobility solution by leveraging the abundant Aluminium reserves in the country.
In another crucial initiative, your Company will be teaming up with Malaysia's state-run oil and gas firm Petronas to expand the business scope of the existing Joint Venture company, IndianOil Petronas Pvt Ltd to include LNG terminals, CNG stations, CGD projects, CBG business and retailing of transportation fuels. We are pursuing more such win-win associations with respective segment leaders to explore newer avenues of growth and gain competitive advantage in the future.
Coming to our business outreaches last year, I must mention that IndianOil indeed raised the bar as far as achieving customer delight is concerned. More importantly, our platter of product innovations during the past year reflects our tenacity to offer comprehensive solutions leveraging the entire energy spectrum. Our Integrated Annual Report elaborates on our customer-centric initiatives in vivid detail.
Your Company has been working tirelessly to cater to every conceivable section of the energy market and in recent times we have successfully rolled out a bouquet of value-added services and offerings. These include India's first 100 Octane Petrol XP100, the mid-segment premium fuel XP95, key LPG innovations such as XtraTej with better fuel efficiency, the Combo Double Bottle Cylinder, the premium Indane Composite Cylinder for the modern kitchens, the rechristened 5 Kg Free Trade Cylinder Chhotu, the new-age high-performance, greener diesel XTRAGREEN, the cutting-edge surface disinfectant formulation XTRAGUARD, besides the pan-India new connection booking facility through Missed calls, Double Bottle Cylinder at the Doorstep, pioneering digital initiative like the Integrated Transaction Processing Server at Retail Outlets, were rolled-out among other offerings. Retail Outlet Automation has also been introduced with the latest technology, to monitor the operations on a real time basis.
Let me assert that in all our operational and marketing endeavours, environmental conscience will be a critical priority. You would appreciate that while the Energy Aatmanirbharta is going to be the fundamental tenet to power our economic march, balancing environmental priorities will be critical for a sustainable future. In this context, the rollout of the National Hydrogen Mission by the Hon’ble Prime Minister is crucial, as it aims to make India a hub for producing and exporting green Hydrogen. This vision validates the green growth trajectory that IndianOil is already pursuing as the 'Energy of India'. Hydrogen is the most promising energy frontier of tomorrow and I am happy to share that your Company has been leading India's foray into leveraging the power of this fuel of the future. To strengthen our bouquet of clean energy offerings, IndianOil will build the nation's first 'Green Hydrogen' plant at Mathura Refinery. While your Company has been working on various hydrogen production pathways, the current project at Mathura Refinery will be pioneering the introduction of green Hydrogen in India. This new age, emission free fuel can be a game changer for the country that is among the top crude oil importing nations. Being the top fuel refiner & retailer, IndianOil is intently pursuing ambitious plans for hydrogen production across various hues, including utilising renewable power to generate green hydrogen.
IndianOil R&D Centre has been undertaking cutting edge research in all facets of Hydrogen, including production, storage, and applications like fuel cells. Our Hydrogen CNG (HCNG) experiment in Delhi, wherein we converted 50 CNG BS-IV buses to run on HCNG fuel, has revealed significant benefits in reducing exhaust emissions and improving the fuel economy. With the bulk of the transportation fleet consisting of BS-IV compliant buses, this is a promising development for improving the air quality of our cities.
Your Company is also in the process of setting up one-tonne per day capacity pilot plants based on four innovative hydrogen production technologies. We would also be operating 15 fuel cell buses in the Delhi NCR region along with Tata Motors. We will also be seeding Hydrogen Mobility by commoditising the surplus quantities of Hydrogen available at the Gujarat refinery with a dispensing facility for Hydrogen powered buses. It is heartening to share that your Company's sustained drive to usher in the Hydrogen revolution is now globally acknowledged as IndianOil has recently been inducted into the World Hydrogen Council.
I must also add that besides Hydrogen, IndianOil remains resolute on strengthening its renewable energy portfolio. The mission of solarising our fuel stations is being actively pursued, along with scouting for new opportunities in the renewable energy sphere. With the addition of Solar Photovoltaics capacity of around 6 Mega Watt (MW) during the year, the total Solar Power capacity is now over 65 MW. Moreover, IndianOil has a Wind Power capacity of about 167 MW, taking the total power generation from Renewable Energy during the year close to 330 Giga Watt Hour (GWh). This has resulted in emission mitigation of about 260 Thousand Metric Tonnes of Carbon dioxide equivalent (TMTCO2e).
Your Company is playing a defining role in promoting Biofuels' usage in the country and leading the Oil PSU fraternity with a decisive action plan. From a national perspective, Biofuels offer a win-win avenue towards rural prosperity through greening of the energy basket and a viable solution to the disposal of agro-wastes. We have undertaken multiple initiatives like setting up Ethanol plants using indigenous feedstock, driving the Government of India's SATAT (Sustainable Alternative Towards Affordable Transportation) scheme and exploring unconventional areas like converting Used Cooking Oil (UCO) to biodiesel. These endeavours are crucial as the Oil and Gas companies are striving to achieve ethanol blending of 20 percent in petrol from the current level of about 8 percent.
Strengthening our environmental stewardship, we are setting up a second (2G) and a third generation (3G) ethanol plant at Panipat Refinery. The 2G plant of 100 Kilolitre per day capacity will use rice straw to produce ethanol. It is aimed at addressing the critical and perturbing issue of stubble burning and will gainfully use the agricultural residue for national welfare. The 128 Kilolitre per day capacity 3G ethanol Plant is based on LanzaTech's innovative Gas Fermentation Technology to gainfully convert refinery off- gases into ethanol. Both the projects are nearing completion and are likely to be commissioned by the end of the current fiscal year.
To further strengthen our forays into biofuels, an agreement was recently signed between IndianOil and Verbio AG, the German biofuels giant, for setting up a Joint Venture company. The JV will steer Biofuel projects and set up Compressed Biogas Plants using the agricultural waste as feedstock to spell a new era in the Biogas segment for IndianOil. Another promising JV for setting up Biofuel projects with NAFED (National Agricultural Cooperative Marketing Federation of India Limited) is also on the anvil. This JV would leverage the NAFED outlets to market products like CBG and organic manures.
Let me again underscore that sustainability will continue to be our priority in all our business endeavours. It is essential that every individual, organisation and corporate must take immediate and calibrated steps today to move towards a cleaner and greener planet. With the recent report by the UN Intergovernmental Panel on Climate Change sounding the “red code for humanity”, going ‘green’ is no more an option, it is indeed a necessity. The spirit of sustainability therefore encompasses all our operational spheres. One such instance is the Tripartite agreement between Mathura Refinery, National Mission for Clean Ganga, and Uttar Pradesh Jal Nigam to reuse up to 4 million gallons per day of treated city sewage water for the refinery operations. With this unique initiative, the Refinery will not be using the fresh water from the river Yamuna and source 100% of industrial water from the treated sewage plant. The facility will be commissioned shortly and will be a major leap towards a cleaner Ganga. Similar initiatives are also planned at Gujarat Refinery and Panipat Refinery.
Corporate Governance is a key driver of sustainable growth in IndianOil and I would like to mention that good corporate governance is critical to maximising stakeholder value while taking care of the interests of multiple stakeholders and the society at large. The value of a collaborative spirit guides IndianOil and IndianOilPeople, and we have created a robust eco-system for preventive vigilance leading to the highest standards of integrity. In these challenging times, the principles of Corporate Governance have become the guiding light for IndianOil. Your Company complies with the guidelines issued by the Department of Public Enterprises as applicable to public sector undertakings, the details of which are provided in the Corporate Governance Report, forming part of the Annual Report.
Before I conclude, I must convey my sincere gratitude to you, our esteemed shareholders, employees & Collectives, channel partners & frontline teams, who are an integral part of the vibrant IndianOil family. I thank you for your unwavering faith always reposed in IndianOil and your unstinted support. Our recent success and ambitious plans are built on your conviction. Let me reaffirm that we will leave no stone unturned to vindicate your faith. To repeat the obvious cliché, we have been through tumultuous times individually and as an organisation. But despite the calamitic impact of the pandemic, IndianOil has soared high on the energy of innumerable Corona Yodhhas whose never-say-die spirit to tide over challenges will be remembered by generations. Every milestone we cross, every glass ceiling we break, and every achievement we celebrate, will remind us of the IndianOil brave hearts who succumbed to the vicious virus while serving the nation's energy needs. It is now up to us to honour their sacrifice by walking the ‘Xtra Mile’ every day to serve the country and this Company.
Let hope and optimism be our compass to fuel a better tomorrow.
As Jim Carrey aptly said, "Hope walks through the fire and faith leaps over it".
Stay safe, stay healthy. Thank You!
Jai Hind!
