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Indian Oil gains after inking JV with Total to offer bitumen derivatives

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Indian Oil Corporation rose 1.50% to Rs 95 after the company set up an equal joint venture with French energy giant Total to manufacture and market bitumen derivatives and specialty products for the Indian road-building industry.

Indian Oil Corporation (IOCL) is the largest player in the Indian bitumen market, while Total is the leading bitumen manufacturer and supplier in Europe. The two companies have already established a business relationship in India, notably in LPG and fuel additives.

The new JVC will combine the R&D and marketing strengths of both IndianOil and Total to manufacture and market innovative bitumen formulations and superior quality products such as polymer-modified bitumen, crumb rubber-modified bitumen, bitumen emulsions and other specialty products. The JVC will set up manufacturing units across the country with cost-effective logistics solutions, keeping innovation, safety and sustainability at the helm of its operations. The JVC will also explore the possibility of catering to other South Asian markets.

SM Vaidya, chairman, IOCL, said, "The JVC would cater to B2B customers involved in road infrastructure development both in the government and private sectors, and I am confident that this would bring a revolution in road construction in the country by providing superior technology products at competitive prices.

The operations of the JVC would commence by taking over an existing plant of Total at Jodhpur. It would also set up six new Greenfield plants at Panipat, Koyali, Haldia, Barauni, Visakhapatnam and Chennai in the first four years. The investment planned towards these new plants is about Rs 226 crore."

The Government of India has a strong focus on developing the country's road infrastructure with mega projects like the 'Bharatmala' project, which envisages development of 34,800 km of roads at an estimated investment of over Rs 5 lakh crore (approx. $66 billion) in the first phase.

The demand for aggregate material and manufactured material for the highway construction and rehabilitation sector in India is very high, especially for good-quality bitumen derivatives. The IndianOil and Total JV will offer high-spec products using sustainable technologies, IOC said in an exchange fiiling made after market hours on Monday (27 July 2020).

The PSU OMC reported a consolidated net loss of Rs 7782.55 crore in Q4 March 2020 as against net profit of Rs 6004.88 crore in Q4 March 2019. Net sales of Q4 FY20 stood at Rs 1,18,007.32, declining 6.4% from Rs 1,26,076 crore in Q4 FY19.

IOCL's segments include sale of petroleum products, sale of petrochemicals and other businesses.

As of 31 March 2020, the Government of India held a 51.5% stake in IOCL while ONGC held a 14.2% stake in the company.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, July 28 2020. 09:37 IST