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Hindustan Petroleum Corporation Ltd.

BSE: 500104 Sector: Oil & Gas
NSE: HINDPETRO ISIN Code: INE094A01015
BSE 00:00 | 27 May 229.80 -5.55
(-2.36%)
OPEN

235.50

HIGH

235.75

LOW

227.35

NSE 00:00 | 27 May 229.85 -4.65
(-1.98%)
OPEN

235.50

HIGH

235.50

LOW

227.40

OPEN 235.50
PREVIOUS CLOSE 235.35
VOLUME 241398
52-Week high 354.55
52-Week low 225.75
P/E 5.11
Mkt Cap.(Rs cr) 32,598
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 235.50
CLOSE 235.35
VOLUME 241398
52-Week high 354.55
52-Week low 225.75
P/E 5.11
Mkt Cap.(Rs cr) 32,598
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Hindustan Petroleum Corporation Ltd. (HINDPETRO) - Chairman Speech

Company chairman speech

Navigating through a challenging environment your Company has delivered its highestever Profit After Tax (PAT) of

Rs.10664 Crore during the Financial Year 2020-21 crossing the Rs.10K Crore mark forthe first time

Dear Shareholder

It gives me immense pleasure to present the 69th Annual Report on theperformance of your Company for the year 2020-21. The year was very challenging for thenation and its people due to the pandemic. At this hour of crisis your Companysalutes the tireless efforts and incredible courage of all the frontline workersfighting COVID-19 pandemic with complete dedication. My heart goes out to everyone outthere who has suffered the loss of their loved ones. Given the scientific progressachieved I am confident that the continuous efforts and strict discipline will eventuallymake us win over the crisis.

During the year the most satisfying achievement of the Company is its proactiveefforts in helping the nation fight against the pandemic. During the lockdown period yourCompany made every effort to serve the nation by ensuring uninterrupted supplies ofessential commodities like cooking gas and transport fuels across the length and breadthof the country while ensuring safety of its workforce. Significant technology solutionswere implemented to ensure that employees can work seamlessly from remote locations / hometo ensure product availability. The Company undertook various relief measures for needyand less privileged people including migrant labour and strengthening the healthinfrastructure.

For the Global Energy Industry Oil was by far the hardest hit. Restrictions onmobility containment measures and economic disruptions related to the COVID-19 outbreakled to sharpest oil demand contraction in calendar year 2020 in decades. Indian economywas equally impacted by the unprecedented crisis. The lockdown measures imposed to containthe pandemic affected the economic activities resulting in contraction of the real GrossDomestic Product (GDP) by 7.3% in 2020-21. In addition the pandemic posed new challengesrelated to business continuity supply chain management and concerns related to health andsafety of the workforce.

Consequent to the several proactive preventive and mitigating measures taken byGovernment the rebound from the COVID-19 induced slump has been sharp in the thirdquarter as real GDP growth turned positive and further strengthened in the fourth quarter.The country's fuel demand which has contracted to almost 50% in April 2020 reboundedsharply with gradual relaxation of lockdown restrictions to end the year with almost 91%of the 2019-20 full year demand.

Crude oil prices varied in a wide range during 2020-21 falling significantly in thebeginning of the year largely driven by demand contraction due to COVID-19 lockdown. Crudeoil prices rebounded subsequently due to sharp recovery in demand as the lockdowns wererelaxed coupled with significant production cuts announced by OPEC+ countries.

I am happy to share that navigating through a challenging environment your Company hasdelivered its highest ever Profit after Tax (PAT) of

Rs.10664 Crore during the Financial Year 2020-21 crossing the Rs.10K Crore mark forthe first time which has been possible only due to tireless efforts of all employeeschannel partners and unwavering faith of all our stakeholders. Your Company exhibited highdegree of agility resilience and responsiveness during the crisis which has earnedgoodwill from its customers and public at large.

The significant improvement in the profitability in spite of challenges due to COVID-19pandemic was a result of efficient planning robust operational performance and effectivesupply chain management. It was further helped by favourable exchange rate variations andinventory gains. The Company achieved gross sales of Rs.269243 Crore during the year.Your Company continues to return value to its shareholders consistently with robustbalance sheet and cash flows. The Board of Directors of your Company has proposed paymentof a final dividend of Rs.22.75 per share for the financial year 2020-21.

To create value for the stakeholders your Company initiated ‘Share Buy Back'program in November 2020 through market transactions for a maximum value of Rs.2500 Croreat maximum rate of Rs.250 per share. As of 31st March 2021 your Company hasbought 7.18 Crore shares at a total value of Rs.1986 Crore. The Buy-back program has beensuccessfully completed on its expiry date of 14th May 2021. In its entireBuy-back program HPCL bought back 10.53 Crore Equity Shares utilising a total amount ofRs.2954 Crore which includes all transaction costs and taxes.

Considering importance of natural gas in future energy mix of the country in asignificant development HPCL acquired balance 50% of the equity in its JV Company HPCLShapoorji Energy Private Limited (HSEPL) making it a wholly-owned subsidiary of HPCL.HSEPL is setting up 5 MMTPA capacity LNG regasification terminal at Chhara in Gujarat forwhich construction is in progress.

During 2020-21 both HPCL refineries at Mumbai and Visakh maintained sound physicalperformance with combined capacity utilisation of 104% and thruput of 16.42 MMT despitethe demand contraction and constraints due to COVID-19 pandemic. Adapting continually tothe unprecedented challenges from COVID-19 effective logistics management sound crudesourcing plans and speedy evacuation of products have helped HPCL to exhibit the sturdyperformance. Mumbai refinery achieved highest annual production of Lube Oil Base Stocks

Your Company exhibited high degree of agility resilience and responsiveness during thecrisis which has earned goodwill from its customers and public at large

SPO 90 N SPO-II and 150 N-II. Visakh Refinery achieved highest annual production ofLDO VLSFO MTO and JBO. Mumbai Refinery also launched a new product Solvent-3275 duringthe year.

Your Company delivered robust marketing performance in 2020-21. HPCL has recorded salesvolume of 36.63 MMT notwithstanding the demand contraction and other challenges due topandemic. In the arduous times HPCL continued its operations without any disruptions toensure availability of petroleum products for essential services to public while ensuringthe safety and wellbeing of its stakeholders and the workforce. To quote an example yourcompany delivered on an average more than 15 lakh LPG cylinders per day during the peaklockdown period ensuring wellbeing of the consumers and safety of the workforce to meetthe sharp increase in demand of cooking gas during this period. In retail sales totalsales volume of 22 MMT was achieved with gaining of market share in Total Motor Fuels(TMF) sales among the PSU OMCs. In sales of LPG your Company has achieved highest eversales of 7.41 MMT with growth of 5.3%. Your Company is the second largest LPG marketer inthe country. In B2B segment the strategy of maximising volumes in three focus productshelped the Corporation to cross 1 MMT sales volume in Fuel Oil (FO) Diesel and Bitumenindividually for the sixth consecutive year. In the highly competitive lubricant marketssales volume of over 600 TMT has been achieved making HPCL the number one lubemarketer in India for eighth consecutive year. Expanding its geographical reach yourCompany exported 14.8 TMT of Lubricants to 16 countries during the year.

Your Company continues to lay strong emphasis on operational efficiency & costoptimisation with continued focus on productivity enhancement measures with usage oftechnology. During the year 18 more locations were added as ‘SMART' terminals withend-to-end automation & seamless integration of various processes resulting inenhanced operational and cost efficiency safety and stakeholder convenience. Withsustained efforts towards efficiency and conservation the Specific Energy Consumption inpipeline operations has been significantly reduced during the year. Continuous monitoringand effective distribution planning have resulted in maximising product evacuation betterinventory management and optimising product sourcing.

Numerous actions have been undertaken by the Corporation to enhance safety in allfacets of operations underpinned by SOPs continuous training of operating manpowertechnology-enabled monitoring practices and alarm systems. Mumbai Refinery has achievedbest ever safety performance by clocking 30.08 million man-hours of safe operations in FY2020-21.

To ensure seamless and cost efficient delivery of petroleum products across thecountry your Company has significantly expanded and upgraded the supply chaininfrastructure during the year with capital expenditure of Rs.14700 Crore. POL supplynetwork was further strengthened with the addition of Madurai Railway Siding facility.Towards enhancement of LPG bottling capacities to meet the increasing market demandconstruction of the 51st LPG plant of the Corporation at Rayagada in the stateof Odisha with bottling capacity of 60 TMTPA has been completed. LPG bottling capacityaugmentation projects were completed and commissioned in Gandhinagar JabalpurBahadurgarh Yediyur and Pampore LPG Bottling Plants with total capacity addition of 270TMTPA during the year. Aviation fuel network was strengthened with commissioning of newASFs at Shirdi in Maharashtra & Kurnool in Andhra Pradesh during the year.

Your Company commissioned 2158 new retail outlets which has been the highest in ayear taking the total retail outlets to 18634 as of 31st March 2021. Last-miledelivery capability of your Company was further enhanced with commissioning of 112 new LPGdistributorships during the year taking total number of LPG distributors to 6192. Duringthe year 369 Door-to-Door Mobile Dispensers were commissioned to deliver fuel to selectcustomers at their premises.

HPCL has always been at the forefront of environmental sustainability throughimplementation of various initiatives in the areas of carbon footprint reduction energyefficiency water conservation waste management renewable energy etc. Equal focus isthrusted to the triple bottom line framework of financial social and environmentalcapitals towards greater business values.

Your Company is continuously expanding the business portfolio with greater presence andfocus in Natural Gas Renewables and Petrochemicals towards energy security climatechange mitigation and futureproofing of the business. HPCL along with its Joint Ventureshas the authorisation for City Gas Distribution (CGD) presence in 34 districts covering 9states in the country. Work on CGD projects in various geographical areas authorised toHPCL and its JVs are in progress. During the year CNG facilities were provided at 203retail outlets making the total number of HPCL retail outlets with CNG facilities to 674.EV charging facilities were enhanced to 84 retail outlets. Your

Company is also working with number of organisations including startups to provideend-to-end EV charging infrastructure across the country to provide multi-fuel options tothe customers. Your company is constructing large scale petrochemical manufacturingfacilities through Joint Ventures to leverage existing and future opportunities inchemicals and specialty products.

On the renewables front your Company is actively working on promotion of CompressedBio Gas (CBG). As of 31st March 2021 HPCL has released 151 LOIs for setting upof CBG plants with total estimated production capacity of 307 TMTPA. In line with yourCompany's commitment to move towards a low carbon economy solar panels were installed at1146 retail outlets during the year taking the total number of retail outlets with solarpower to 4648 outlets. With this 25% of HPCL outlets are operating on solar power.During the year your Company has installed captive solar power capacity of 11.4MWp across various locations taking the total solar power capacity to about 43.95 MWp asof 31st March 2021. During the year HPCL has generated about 17.05 Crore kWhof electricity from its wind mills having capacity of 100.9 MW. Towards reduction ofcarbon intensity in transportation sector HPCL is actively participating in EthanolBlending programme and has recorded overall Ethanol Blending Percentage (EBP) of 6.18% byblending 58.84 Crore litres of Ethanol in Petrol during 2020-21. In addition HPCL alsorecorded blending of 4.1 Crore litres of Biodiesel during the year.

Research & Development remains to be of paramount importance for your Company todevelop demonstrate and deploy novel & innovative products & technologies. HPCL'sGreen R&D Centre at Bengaluru is constructing 7 new labs in Phase II expansionprogramme in addition to existing 9 labs. Under Phase II programme construction ofPetrochemicals and Polymers Lab Lubes Research Lab Corrosions

Studies Lab and Green Hydrogen generators with PEM electrolyser were completed duringthe year. I am happy to share that continued focus in research and innovation acrossvarious areas in energy sector enabled your Company to receive 44 patents during the yeartaking the cumulative patents granted to 90 as on 31st March 2021.

Your Company is embracing emerging & innovative technologies to enhance customervalue and convenience. Implementation of Customer Relationship Management (CRM) toolensured enhanced customer orientation & superior service standards. For customer valuemaximisation digital transactions were promoted in all business activities. IntegratedPayment System (IPS) with integration of Point of Sale (POS) machine with dispensing units(DUs) were installed at 6924 retail outlets providing easy and smart payment options tothe customers. New services and features were integrated in ‘HP PAY' app and ‘HPGAS Vitran' app.

Strong commitment dedication and competence of more than 9400 employees is thebackbone of the Corporation. Armed with a number of millennials and with gender diversitythe Corporation's workforce has strengths of experience youthful energy innovativemindset & multiple perspectives. The Corporation has a strong culture of learning anddevelopment which is further enriched through initiatives like e-learning partnershipswith academia and learning through virtual reality centres.

With the strong belief that business priorities co-exist with social commitments &inclusive growth your Company is continuing its contribution towards nation buildingthrough effective implementation of various socio economic development programmesinitiated by Government of India. In addition to generous contribution to PM CARESFund your Company delivered over 3.8 Crore LPG refills to the beneficiaries under PradhanMantri Garib Kalyan Yojna (PMGKY) scheme as of 31st March 2021. As part ofCorporate Social Responsibility (CSR) plan your Corporation has undertaken variousactivities during the year under the focus areas of childcare education health careskill development sports and environment & community development thus positivelyinfluencing the lives of less privileged. Your Company has been proactively working tohelp fight COVID-19 pandemic by strengthening health infrastructure acceleratingvaccination drive providing storage and transportation facilities for COVID Vaccines andproviding relief to less privileged and migrant workers.

Your Company is continuously enhancing its ability to navigate the future challenges bystrengthening the existing business of refining & marketing and consolidation of newbusiness lines including petrochemicals natural gas and bio fuels. The R&Dcapabilities of the Corporation are continuously scaled up to provide competitive edge toyour Company. The focus is on building a diversified and flexible business portfolioaligned with the needs of changing market coupled with expansion of business footprints inoverseas geographies. New avenues of value creation in areas of electric mobility &other emerging areas are being explored in collaboration with various technology start-ups& OEMs. To keep pace with the transition in the technology and customer preferencesthe Company is focussing on value creation by leveraging the emerging digital technologiesfor transformation and enhancing IT capabilities. With the formulation of Digital StrategyRoad Map organisation has been galvanised towards long-term digital transformation andvarious digital initiatives are under implementation. The ERP modernisation projectimplementation is also in progress.

Your Company has undertaken a number of large-scale projects across the energy valuechain to support future growth improve efficiencies increase competitiveness and enhanceparticipation in renewable sector. Some of the major projects are fast approaching towardscompletion to realise the intended benefits. Visakh Refinery

Your Company is continuously expanding the business portfolio with greater presence andfocus in Natural Gas Renewables and Petrochemicals towards energy security climatechange mitigation and futureproofing of the business

Modernisation Project and Mumbai Refinery Expansion Project are in advance stage ofcompletion with Visakh Refinery Bottom Upgradation Project also progressing well. The 9MMTPA Greenfield Refinery and Petrochemical Complex project of HPCL Rajasthan RefineryLimited (HRRL) has picked up speed with construction in progress. The construction of the5 MMTPA LNG regasification terminal at Chhara port in Gujarat by our subsidiary company isprogressing well. Marketing supply infrastructure is being augmented with additionalcross-country pipeline network length of over 1500 km and capacity addition of over 7MMTPA. The three major cross-country pipeline projects namely Vijayawada DharmapuriProduct Pipeline Hassan Cherlapalli LPG Pipeline and Barmer Palanpur Product Pipelinesproject are running ahead of schedule. In addition a number of LPG Plants AviationService Facilities CGD network etc. along with upgradation of existing facilities atsupply locations are under different stages of implementation. On the renewable frontconstruction of 2G refinery at Bathinda and Compressed Bio Gas (CBG) plant at Badaun in UPare in progress in addition to the CBG plants being set up under SATAT scheme by otherentrepreneurs with offtake support from HPCL for Bio Gas.

Global economic growth is gaining momentum. Economic activity in the country isgathering strength supported by the recovery in both demand and supply channels largepent up demand sustained rollout of the vaccination programme growth-enhancing proposalsin the Union Budget and accommodative monetary policies. Lower perceived risks on possiblesubsequent pandemic waves in future and new mutant variants is also aiding the recovery.Global financial market volatility however may pose a risk. Considering the demographyeconomic development and lower

Your Company remains focussed on delivering consistent competitive responsible growth& value creation through sustainable business models with a right mix of strengtheningcore business and leveraging new opportunities in product portfolio & geographies.

per capita energy consumption India's requirement for energy is increasing rapidly. AsIndian economy rebounds from its contraction in the previous year with removal ofrestrictions on mobility recovery in industrial activities and increased public &private spending primary energy consumption is projected to rise sharply. While oilcontinues to remain the main stay to meet the fuel demand of the country regulatorythrust on increasing penetration of low carbon energy will increase consumption of naturalgas and bio fuels in India's energy basket.

Emerging alternate sources of energy will also help in catering to a part of theincreasing energy demand.

We are in a rapidly changing world where digital connectivity and abundance of data isreshaping value creation models across verticals. Your Company is actively working onleveraging emerging technologies in various areas of its business to enhance efficiencyand customer experience.

Your Company remains focussed on delivering consistent competitive responsible growth& value creation through sustainable business models with a right mix of strengtheningcore business and leveraging new opportunities in product portfolio & geographies.

I am thankful to the Ministry of Petroleum & Natural Gas State Governmentsvarious statutory and local bodies for their guidance and support in all our efforts andlook forward to their continued support in future as well.

I would like to thank all our customers shareholders business associates employeesand other stakeholders for their unflinching commitment and support. I would also like toconvey my sincere appreciation to the Board of Directors for their guidance and maturecounsel.

I look forward to your continued support for our shared vision of

"Creating Value and Delivering Growth".

Thank you

Mukesh Kumar Surana

.