Hindustan Petroleum: The T20 Strategy

Hindustan Petroleum Corporation (HPCL) ranks among the top 3 petroleum and oil lubricants (POL) marketing companies in India, with a market share of 23.63 per cent among the PSUs. Some of the leading lubricant brands come from its stable and HPCL’s market share among lubes is 42.6 per cent among the PSUs.

At HPCL’s last AGM in September, chairman and managing director, Mukesh K. Surana said, “To continue the growth momentum and position our company ahead of (the) performance curve, a strategic plan named ‘T20’ was formulated.

The ‘T20’ strategy is aimed at creating value in the eyes of customers and for achieving exponential growth and accelerated profit by focusing on distinct identified themes keeping safety and integrity at the core of all operations. In August, the Federation of Indian Petroleum Industry (FIPI) anointed HPCL with the epithets ‘Responsible Growing Corporate of the Year’ and ‘Oil & Gas Marketing Company of the Year’.

The major drivers for HPCL in the last fiscal were “increased marketing throughput of 35.23 million metric tonne (MMT), higher domestic market sales of Rs 2,13,489 crore, better operating efficiencies and inventory gains”. Its consolidated profit, comprising the profits of joint ventures like HPCL-Mittal Energy, Petronet MHB and Godavari Gas and subsidiary companies such as HPCL Rajasthan Refinery, soared 76.2 per cent to Rs 11,197.42 crore in 2016-17. In a year that saw demonetisation and a cash crunch, HPCL focussed on e-wallets and digital payments. As much as 77 per cent of HPCL’s point of sale (POS) counters have e-coverage.

“Lower crude oil prices had a positive impact on (the) Indian economy due to reduced cost of imports,” said Surana. “The government of India has plans to reduce oil import dependence by 10 per cent by 2022 and has launched various initiatives for promoting domestic production of oil & gas, increase use of alternate fuels and move towards a low carbon economy.”

Commenting on the petroleum refining sector in general, SVP and Group Head, Corporate Ratings at ICRA, K. Ravichandran said, “Reduction of crude oil imports appears pretty difficult by 2022. On the natural gas front, though, it is more achievable. Government policies are in a very good direction but existing fields may not give us an edge in domestic crude production.”

Hindustan Petroleum expects the rollout of the goods and services tax (GST) to “yield substantial growth dividends from higher efficiencies by removing tax barriers”. The company is adhering to the Indian government’s strictures on green fuel. Both the Mumbai and Visakhapatnam refineries of HPCL upgraded infrastructure to be able to conform to BS IV specifications for petrol and diesel from 1 April.

Union Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan says the diktat was for all PSU refineries. “Approximately $2 billion is being invested by all the government PSUs by way of R&D for second generation biofuel refineries across the country.” The minister added that the biofuel industry in the country would have a turnover of Rs 1 lakh crore over the next two years.