IndianOil Performance 2006-07
New Delhi 28-May-2007
The financial year 2006-07 was highly rewarding for IndianOil, with gross turnover exceeding Rs. 2,00,000 crore, product sales reaching a new high, and both the refineries and pipelines network registering record throughputs, besides commissioning of key projects worth Rs. 10,000 crore.
According to IndianOil Chairman, Mr. Sarthak Behuria, the Corporation continued its dominance in the downstream sector by selling 54.8 million tonnes of petroleum products during the year 2006-07 as compared to 52 million tonnes in the previous year. This includes sale of natural gas, which has gone up to 1.5 million tonnes from 1.3 million tonnes in the previous year. In addition, product exports went up to 3.1 million tonnes from 2 million tonnes in the previous year.
During the year, IndianOil’s seven refineries clocked the highest-ever throughput of 44 million tonnes with 98% capacity utilisation, which translated into a 14% growth in crude oil processing over the previous year. Its pipelines network too achieved the highest ever throughput of 51.7 million tonnes of crude oil and petroleum products, an increase of 14% over the previous year.
Mega projects commissioned during the year were: capacity expansion at Panipat Refinery from 6 to 12 million metric tonnes per annum (MMTPA), a world scale PX/PTA (Paraxylene/Purified Terephthalic Acid) plant at Panipat for polyester intermediates, MS (petrol) quality upgradation project at Gujarat Refinery, and the Mundra-Panipat crude oil pipeline with onshore facilities at Mundra for handling heavy crude oil imports.
IndianOil joined the league of global technology providers during the year with its in-house developed IndMax technology selected for the 4 MMTPA Fluidised Catalytic Cracking (FCC) unit at the Corporation’s upcoming 15 MMTPA refinery-cum-petrochemicals complex at Paradip in Orissa, as well as for the FCC unit coming up at BRPL.
Among new businesses, Gas Marketing, Petrochemicals, and Consultancy together generated revenues of about US$ 1 billion during the year 2006-07. Continued successes in acquisition of oil & gas assets in India and abroad ensured substantial growth in the E&P portfolio. Efforts in globalisation of products and services received a fillip with overseas subsidiaries consolidating and expanding their business activities.
In a major policy shift, the Corporation received permanent approval of the Government of India to continue with ship chartering on its own. It also became the first PSU to commence trading on the domestic commodities and derivates exchange (NCDEX) during the year.
Implementation of the ambitious SAP Enterprise Resource Planning (ERP) package, one of the largest in Southeast Asia, was completed during the year connecting over 650 locations and 5,000 concurrent users to a common IT platform for online, concurrent business transactions.
The stand-alone marketing subsidiary, IBP Co. Ltd., was merged with the parent company with effect from 2nd May, 2007.
<b>Core Performance </b>
<u>Financial</u>
IndianOil's Gross Turnover (inclusive of excise duty) for the year 2006-07 reached a new high of Rs.2,20,779 crore, up by 20.53% as compared to Rs. 1,83,172 crore in the previous year.
The Profit After Tax was Rs. 7499 crore, which is after considering the compensation of Rs. 13,943 crore in the form of oil bonds issued by the Government of India and sale of 20% of IndianOil’s equity holding in ONGC Ltd. The total sales proceeds were Rs. 3,670 crore, resulting in a profit of Rs. 3,225 crore.
The IndianOil Board, which met here today, recommended a Final Dividend @ 130% (Rs. 1550 crore) for the year 2006-07. This is in addition to an interim dividend of 60% (Rs. 701 crore) declared in December 2006. For the previous fiscal (2005-06), IndianOil has paid a total dividend of 125% (Rs. 1460 crore).
For the year 2006-07, the Company's Earnings Per Share (EPS) stand at Rs. 62.90 as compared to Rs. 42.08 for 2005-06. The total net under-recovery on account of price under-realisation on petrol, diesel, PDS kerosene and Domestic LPG in the financial year 2006-07 is Rs. 2190 crore, after considering the compensation received in the form of oil bonds, subsidy sharing by upstream companies, Govt. of India subsidy and discounts from refineries.
<u>Refineries</u>
IndianOil imported 42.4 million tonnes of crude oil during 2006-07 on behalf of group companies, as against 37.5 million tonnes during 2005-06. For improved margins, the Corporation’s seven refineries processed the highest ever percentage (43.7%) of high-sulphur crude oil during the year as against the previous highest (38.7%) in the year 2005-06. Sharing of feedstock and intermediates between the group refineries was stepped up for optimum capacity utilisation and value addition. Committed efforts in energy conservation resulted in record lowest overall energy consumption. All the refineries took up Clean Development Mechanism projects to help reduce greenhouse gas emissions.
<u>Pipelines</u>
The cross-country pipeline network was expanded to about 9,300 km with the commissioning of the Mundra-Panipat pipeline (by conversion of the 1,100-km Kandla-Panipat section of the erstwhile Kandla-Bhatinda product pipeline to crude oil service and laying a 74-km new section connecting Mundra to Kandla), the Koyali-Dahej product pipeline (103 km), and a branch line to Chittaurgarh on the Sidhpur-Sanganer product pipeline (158 km). A state-of-the-art marketing facility was also commissioned at Trichy in Tamil Nadu as an intermediate tap-off point on the 683-km Chennai-Trichy-Madurai product pipeline. The 330-km Paradip-Haldia crude oil pipeline is also nearing completion, and will facilitate cost-effective transportation of crude oil to Haldia and Barauni refineries.
<u>Marketing</u>
IndianOil’s Marketing Division maintained its dominance in the downstream sector during the year 2006-07. Besides retaining large volume consumers, it consolidated its position in the retail segment, opening 1,332 new petrol/diesel stations (retail outlets) during the year. Out of these, 763 were low-cost, small-format Kisan Seva Kendra (KSK) outlets in rural markets. With this, IndianOil now has a countrywide retail network of 16,455 petrol/diesel stations, including 1,343 KSK outlets. The Corporation plans to add 1,600 more outlets during 2007-08, including 1,000 KSKs.
The customer base for Indane LPG cooking gas grew to 4.67 crore at the end of 2006-07, with enrolment of 31.5 lakh new customers during the year. Two new LPG bottling plants were commissioned at Sekmai in Manipur and Mualkhang in Mizoram, taking their total to 90.
For the first time, IndianOil’s branded fuels – XTRAPREMIUM petrol, XTRAMILE diesel and AUTOGAS LPG for automobiles – emerged as leaders in their respective segments. Availability of XTRAMILE, with an overall market share of 53%, was extended to 8,232 retail outlets. XTRAPREMIUM, with 37% share, is now available from 4,223 outlets. AUTOGAS is now available from 107 outlets in 49 cities, and is being extended to 100 more outlets to cover 75 cities in 2007-08.
IndianOil’s XTRAPOWER fleet card programme with over 10 lakh members has reached transactions of Rs. 7,500 crore per year.
IndianOil continued to be the market leader in aviation fuelling with an overall market share of 63%. The year 2006-07 saw a 20% growth in ATF sales and commissioning of Aviation Fuelling Stations at Dehradun and Pantnagar in Uttarakhand, taking their total number to 97. Marine sales too grew by 65%, bringing in foreign exchange of US$ 33 million.
As part of stepped-up efforts to curb malpractices, operations at 160 retail outlets were fully automated during the year and work is in progress to cover 2,000 outlets by March 2008. A unique marker system was launched to curb adulteration of petrol and diesel with kerosene.
<u>Projects</u>
IndianOil is implementing projects of over Rs. 50,000 crore currently. Major ones among them are: a grassroots refinery-cum-petrochemicals complex at Paradip (Rs. 25,646 crore, to be commissioned by Oct. 2011), a Naphtha Cracker with downstream polymer units at Panipat (Rs. 14,439 crore, by Nov. 2009), a resid upgradation project at Gujarat Refinery (Rs. 5,693 crore, by Jan. 2010), a once-through hydrocracker & capacity augmentation at Haldia Refinery (Rs. 2,869 crore, by Dec. 2009), Panipat Refinery expansion from 12 to 15 MMTPA (Rs. 806 crore, by Dec. 2008), and MS quality improvement projects at Panipat, Mathura, Barauni, Digboi & Guwahati refineries (Rs. 1,503 crore, by Dec. 2009).
<u>R&D </u>
During the year, IndianOil’s R&D Centre developed 85 product formulations, earned seven patents, and secured 43 product approvals from original equipment manufacturers.
<u>Mergers</u>
As a step towards achieving smooth and seamless integration of business activities and people of erstwhile IBP in IndianOil, a new ‘IBP Division’ has been created with immediate effect. The various business segments of erstwhile IBP are being integrated with similar business segments of the respective divisions of IndianOil at the earliest so as to achieve the objectives of synergy, consolidation and optimisation of resources. The IBP accounts for 2006-07 were merged with IndianOil accounts. 11th June 2007 has been fixed as record date to ascertain the eligibility of IBP shareholders for issue of IndianOil shares as per swap ratio.
<b>New Business Initiatives </b>
Besides strategic consolidation in core areas, IndianOil took big strides into new growth areas during the year 2006-07.
<b>Integration Initiatives </b>
<u>E&P</u>
IndianOil bagged two more domestic shallow water blocks under the latest round (Round-VI) of NELP (New Exploration Licencing Policy) in consortium with other partners. With this, it now has eight blocks under the NELP scheme, in various stages of exploration, of which gas has been struck in the Mahanadi offshore well.
In the Farsi offshore exploration block of Iran, the IndianOil–Oil India Ltd. (OIL)–ONGC Videsh Ltd. consortium drilled four exploratory wells during 2006-07. Oil flow has been detected in two of them and gas in one. The IndianOil–OIL consortium ‘farmed-in’ in the onshore exploration Block Shakthi in Gabon, with 45% participating interest each. The IndianOil–OIL–Suntera Resources (Cyprus) consortium acquired a stake (IndianOil share-17.5%) in an on-land exploration block in Nigeria. In Yemen, a consortium of IndianOil, OIL, Kuwait Energy and Medco Energi (of Indonesia) was awarded two on-shore exploration blocks under the third international exploration & production round. Exploration activities are progressing in two contiguous blocks awarded to the IndianOil-OIL consortium in Sirte Basin of Libya.
<u>Petrochemicals</u>
In the second year of LAB (Linear Alkyl Benzene) marketing, the LAB unit at Gujarat Refinery operated at full capacity (1,20,000 tonnes per annum). Besides domestic sales, sizeable exports were made to Indonesia, Norway, Oman, Thailand, Turkey and Vietnam. During the year, commercial dispatches of PTA from Panipat to all segments of the polyester industry in domestic and overseas markets commenced.
An MoU was signed with Haryana State Industrial & Infrastructure Development Corporation for launching a special purpose vehicle for the development of a petrochemical hub at Panipat. A Memorandum of Agreement was also signed with the Government of West Bengal to explore the possibility of creation of a Petroleum, Chemicals & Petrochemicals Investment Region (PCPIR) at Haldia.
<b>Diversification Initiatives </b>
<b>Gas</b>
IndianOil sold 1.5 million tonnes of re-gassified LNG (R-LNG) during the year 2006-07, including 11 spot cargoes sourced for the first time by Petronet LNG Ltd. (PLL). The customer base was expanded and a purchase agreement was finalised with PLL for 0.5 million tonnes of additional R-LNG, besides the existing contractual allocation of 1.5 MMTPA.
In a renewed focus on city gas distribution, IndianOil is incorporating a second joint venture with GAIL covering West Bengal. Green Gas Ltd., the first JV, has commissioned one CNG station in Agra and four in Lucknow. IndianOil has signed a separate MOU with Great Eastern Energy Corporation Ltd. to set up gas distribution networks in Asansol, Durgapur and Raniganj based on gas from their Coal Bed Methane blocks.
<b>Globalisation Initiatives </b>
<b>Overseas Subsidiaries </b>
<i>Lanka IOC (LIOC) </i>
LIOC launched branded fuels LankaPremium petrol and LankaMile diesel during the year to good acceptance. It also commissioned the first grassroots A-site retail outlet at Trincomalee, taking the total number of outlets to 151. An 18,000 tonnes per annum lube blending plant is to be commissioned at Trincomalee by July 2007.
<i>IndianOil (Mauritius) Ltd. (IOML)</i>
IOML’s sales grew by over 26% as compared to the previous fiscal. With new agreements in place with air operators, aviation business grew by 40% as compared to the previous year. The number of retail outlets also went up to eight. IOML recently commissioned Mauritius’ only state-of-the-art laboratory with petroleum product testing facilities. It is partnering Shell, Caltex-Chevron and Total to build an aviation jet fuel depot at the SSR international airport at a cost of US$ 16 million.
<i>IOC Middle East FZE (IOME)</i>
IOME at Jebel Ali Free Trade Zone in UAE is blending SERVO lubricants and marketing petroleum products and lubricants in the Middle East, Africa and CIS countries.
<u>Exports & Consultancy</u>
Group-I & Group-II Lube Oil Base Stock (LOBS) were exported to the Middle East and Pakistan during the year. Finished lubes were exported to Bangladesh, Nepal and Zambia, diesel to Bangladesh and Sri Lanka, and bitumen to Bangladesh and Nepal. Product exports realised revenues of Rs. 661 crore for the year 2006-07.
The manpower secondment agreement and the technical services agreement with Emirates National Oil Company, Dubai, have been extended for the ninth and tenth successive years respectively. Training programmes are being conducted for oil sector officials of Iraq, Oman and Sudan.
IndianOil, in collaboration with Calik Enerji of Turkey, proposes to set up a 15 MMTPA grassroots integrated refinery-cum-petrochemicals complex at Ceyhan in Turkey. An application has been submitted to the authorities concerned seeking license. IndianOil is also acquiring 12.5% of the shares in the Trans-Anatolian Pipeline Company, a company promoted by Calik Enerji and Eni of Italy. This company would lay and operate a 550-km crude oil pipeline of 50 MMTPA capacity connecting Samsun and Ceyhan.
With a view to promote bio-fuels, a dedicated group has been formed and discussions are on with various State Governments for undertaking collaborative projects in commercialising bio-diesel. Suitable land clusters of approximately 30,000 hectares are being identified in Madhya Pradesh and Chhattisgarh for developing jatropha plantations for production of bio-diesel.
<a href=IndianOil_Performance_2006-2007.aspx class=normallink >Presentation on IndianOil's financial results 2006-2007</a><br/>
<a href=Audited.htm class = normallink >Audited Financial Results for the Year Ending 31st of March 2007</a>
