Bharat Petroleum Corporation Ltd:Annual Report 2023-24 Analysis

Bharat Petroleum Corporation Ltd. (BPCL): A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

Bharat Petroleum Corporation Limited (BPCL) traces its origins back to 1928 with the establishment of Asiatic Petroleum Company (India). In 1952, it was renamed Burmah Shell Oil Storage and Distributing Company of India Limited. The company was nationalized in 1976 and renamed Bharat Petroleum Corporation Limited.

Headquarters Location and Global Presence #

BPCL’s headquarters is located in Mumbai, India. While its primary operations are concentrated in India, BPCL has expanded its presence internationally through subsidiaries and investments.

Company Vision and Mission #

• Vision: To be the most admired global energy company leveraging talent and technology.
• Mission: Delivering value, enriching lives.

Key Milestones in Their Growth Journey #

• 1928: Asiatic Petroleum Company (India) established.
• 1952: Renamed Burmah Shell Oil Storage and Distributing Company of India Limited.
• 1976: Nationalized and renamed Bharat Petroleum Corporation Limited.
• 1998: Launch of the ‘Pure for Sure’ initiative, emphasizing fuel quality and quantity assurance.
• 2003: Government disinvests 35.2% stake in BPCL.
• 2021: Privatization process initiated by the Government of India (subsequently cancelled).

Stock Exchange Listing Details and Market Capitalization #

BPCL is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). (Market capitalization data should be updated from current market sources).

Recent Financial Performance Highlights #

(Recent financial performance should be filled with the latest quarterly/annual reports): This would typically include information like:

• Revenue
• Net Profit
• Earnings Per Share (EPS)
• Debt Levels
• Key Financial Ratios

Management Team and Leadership Structure #

(This section should be populated with current information from BPCL’s website and annual reports): This usually includes:

• Chairman & Managing Director
• Directors (Finance, Marketing, Refineries, etc.)
• Chief Vigilance Officer

Notable Awards or Recognitions #

BPCL has received numerous awards and recognitions for its performance in various areas, including:

• Energy conservation
• Corporate Social Responsibility (CSR)
• Safety
• Innovation

Their Products #

Complete Product Portfolio with Categories #

BPCL offers a wide range of petroleum products, categorized as follows:

• Fuels: Petrol, Diesel, Auto LPG, Aviation Turbine Fuel (ATF), Kerosene
• Lubricants: Automotive, Industrial, Marine
• Specialty Products: Bitumen, Wax, Petrochemicals, Solvents
• Gases: LPG for domestic and commercial use, CNG

Flagship or Signature Product Lines #

• MAK Lubricants: A well-established brand of automotive and industrial lubricants.
• Bharatgas: The company’s LPG brand for domestic and commercial use.
• Speed: Premium petrol variant.

Manufacturing Facilities and Production Capacity #

BPCL operates refineries at Mumbai, Kochi, and Bina. (Exact production capacities of each refinery should be included with current figures).

Quality Certifications and Standards #

BPCL’s products and operations adhere to various quality certifications and standards, including:

• ISO 9001 (Quality Management)
• ISO 14001 (Environmental Management)
• OHSAS 18001/ISO 45001 (Occupational Health and Safety Management)

Primary Customers #

Target Industries and Sectors #

BPCL serves a diverse range of industries and sectors, including:

• Automotive
• Aviation
• Industrial
• Agriculture
• Marine
• Transportation
• Residential

Geographic Markets (Domestic vs. International) #

BPCL’s primary market is India. They also have international presence through subsidiaries and exports.

Major Client Segments (Agricultural, Industrial, Residential, etc.) #

• Agricultural: Farmers and agricultural businesses requiring fuels, lubricants, and LPG.
• Industrial: Manufacturing plants, construction companies, and other industrial entities needing fuels, lubricants, and specialty products.
• Residential: Households using LPG for cooking and heating.
• Commercial: Businesses, restaurants, and hotels utilizing LPG.
• Transportation: Fleet operators, logistics companies, and public transport providers requiring fuels and lubricants.

Distribution Network and Sales Channels #

BPCL has a vast distribution network comprising:

• Retail outlets (petrol pumps)
• LPG distributors
• Direct sales to industrial customers
• Depots and terminals

Major Competitors #

Direct Competitors in India and Globally #

• Indian Oil Corporation Limited (IOCL)
• Hindustan Petroleum Corporation Limited (HPCL)
• Reliance Industries Limited (RIL)
• Nayara Energy (formerly Essar Oil)

Comparative Market Share Analysis #

(Market share figures for fuels, LPG, and lubricants should be updated using reliable market research reports).

Competitive Advantages and Disadvantages #

Advantages:

• Established brand reputation
• Extensive distribution network
• Strong refining capacity
• Diversified product portfolio

Disadvantages:

• Government regulations and price controls (though lessening)
• Exposure to fluctuations in crude oil prices
• Competition from private players

How They Differentiate from Competitors #

• Focus on customer service and convenience (e.g., ‘Pure for Sure’ initiative).
• Investments in technology and innovation.
• Expanding into renewable energy sources.

Future Outlook #

Expansion Plans or Growth Strategy #

BPCL is focusing on:

• Expanding its refining capacity through debottlenecking and modernization.
• Increasing its retail network, particularly in rural areas.
• Venturing into petrochemicals and renewable energy.

Sustainability Initiatives or ESG Commitments #

BPCL is committed to:

• Reducing its carbon footprint.
• Investing in renewable energy projects (solar, wind).
• Promoting energy efficiency.
• Implementing CSR initiatives focused on community development.

Industry Trends Affecting Their Business #

• Increasing demand for energy, particularly in developing countries.
• Growing adoption of electric vehicles (EVs).
• Shift towards cleaner fuels and renewable energy sources.
• Geopolitical instability and its impact on crude oil prices.

Long-Term Vision and Strategic Goals #

BPCL aims to transform itself into an integrated energy company, focusing on sustainability and innovation, while maintaining its strong position in the traditional petroleum market.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue from operations decreased to ₹5,06,911.36 crore in FY 2023-24 from ₹5,33,467.55 crore in FY 2022-23, but remained higher than the ₹4,35,015.73 crore reported in FY 2021-22.
• Net Profit significantly increased to ₹26,673.50 crore in FY 2023-24, compared to ₹1,870.10 crore in FY 2022-23 and ₹11,363.65 crore in FY 2021-22.
• Basic Earnings Per Share (EPS) rose to ₹125.21 in FY 2023-24, compared to ₹8.78 in FY 2022-23 and ₹53.41 in FY 2021-22.
• EBITDA Margin increased significantly to 9.3% in FY 2023-24, compared to 2.5% in FY 2022-23 and 5.5% in FY 2021-22.
• Return on Capital Employed (ROCE) improved to 34.07% in FY 2023-24, from 4.70% in FY 2022-23 and 27.28% in FY 2021-22.
• Debt-Equity Ratio decreased to 0.25 in FY 2023-24 from 0.69 in FY 2022-23 and 0.65 in FY 2021-22.
• Cash flow from operating activities was ₹35,936 crore in 2023-2024, as against ₹12,466 crore in 2022-2023, and ₹20,336 crore in 2021-2022.

Business Segment Performance #

• Refineries: Crude throughput increased to 39.93 MMT in FY 2023-24 from 38.53 MMT in FY 2022-23. Capacity utilization was 112% in FY 2023-24, compared to 109% in the previous year. GRM was $14.14/bbl, which was higher than PSU OMCs for the second consecutive year.
• Retail: Market sales reached a record 51.04 MMT in FY 2023-24, a 4.33% growth over the previous year. The market share among PSU OMCs was 27.57%. CNG market share increased to 30.57% in FY 2023-24, with a growth of 1.54%.
• LPG: Sales reached a record high of 7,928 TMT. The business unit enrolled 18.54 lakh new customers under Ujjwala 2.0.
• Lubricants: MAK Lubricants recorded its highest ever sales volumes of 446 TMT, a 16% growth.
• Aviation: Sales reached 1,901 TMT, registering 9.40% growth and a 25.20% market share among OMC PSUs.
• Gas: Capex of ₹1,920 crore was spent in FY 2023-24 for the expansion of CGD networks. 671 CNG stations were mechanically commissioned.

Major Strategic Initiatives and Their Progress #

• Project Aspire: A five-year strategic framework with a planned capex of ₹1.70 lakh crore, focusing on “Nurturing the Core” and “Investing in Future Big Bets.”
• Bina Petrochemical and Refinery Expansion Project (BPREP): An estimated cost of ₹43,367 crore, with the foundation stone laid in September 2023. The project is on track for commissioning in 2028 with 1.8% physical progress as on 31st March 2024.
• Polypropylene Unit at Kochi Refinery: A 400 KTPA capacity project with an approved cost of ₹4,460 crore, scheduled for completion in 2027.
• Renewable Energy: Targets of 2 GW by 2025 and 10 GW by 2035. Investments of around ₹1,000 crore in two 50 MW wind power plants and approximately ₹300 crore in a 72 MWp solar project.
• Green Hydrogen: A 5 MW electrolyser plant at Bina Refinery and a green hydrogen refueling station at Kochi are under implementation.
• Biofuels: Increased ethanol blending in petrol to 11.7%. Construction of a 2G bio-ethanol plant in Bargarh, Odisha, is underway.

Risk Landscape Changes #

• Geopolitical Risks: Continued emphasis on energy security due to ongoing global conflicts and supply chain disruptions.
• Market Volatility: Fluctuations in crude oil and product prices influenced by OPEC+ decisions and global economic conditions.
• Regulatory and Policy Risks: Evolving policies related to emissions, renewable energy, and biofuels, impacting long-term planning and investments.
• Operational Risks: Focus on maintaining safety standards and preventing incidents through rigorous safety management systems.
• Cybersecurity Risks: Increased focus on digital transformation and integration of IT systems to mitigate cyber threats.

ESG Initiatives and Metrics #

• Environmental: Aim to achieve Net Zero emissions (Scope 1 & 2) by 2040, requiring a phased capital outlay of approximately ₹1 lakh crore. Initiatives include increasing renewable energy capacity, setting up green hydrogen plants, and promoting biofuels.
• Social: Implementation of CSR projects across 25 aspirational districts, focusing on health, sanitation, education, environmental sustainability, and skill development. BPCL spent a total of ₹158.19 crore on CSR activities during the year.
• Governance: The Board of Directors is committed to corporate governance principles, focusing on transparency, stakeholder protection, and ethical conduct.

Management Outlook #

• BPCL aims to meet 7-10% of India’s primary energy demand by 2047, aligning with India’s vision of becoming a $30 trillion developed economy.
• The company plans to expand refining capacity and develop integrated petrochemical complexes to meet the rising demand for petroleum products and petrochemicals.
• BPCL will maintain focus on upstream Oil & Gas projects, with a goal to expedite monetization of discoveries in Mozambique and Brazil.
• Continued expansion of retail footprint, LPG distributorships, and POL terminals to enhance market reach and customer base.
• BPCL aims to be a key player in India’s biofuel initiative, with plans to set up 26 CBG plants and a bio-ethanol refinery.
• The company remains vigilant about emerging risks and opportunities in the dynamic energy landscape, leveraging agility and operational excellence.

Detailed Analysis #

Financial Position Analysis of BPCL #

Balance Sheet Analysis #

3-Year Comparative Analysis of Assets, Liabilities, and Equity (Consolidated, in ₹ crore) #

Significant Changes in Major Line Items (>10% YoY) #

• Non-Current Assets: Increased by 3.50% primarily due to the increase in Capital Work-in-progress.
• Current Assets: Increased by 17.22% driven by increase in the Inventories.
• Total Equity: Increased by 41.31% due to a substantial increase in retained earnings driven by a significant increase in profitability.
• Non-Current Liabilities: Decreased by 23.17% due to reduced borrowings.
• Current Liabilities: Increased by 8.03%.
• Other Equity: Increased by 43%
• Goodwill: Remained Constant
• Intangible assets under devlopment: increased by 8.68%

Working Capital Trends #

• Current Assets (₹ crore):

  • 2024: 65,694.11
  • 2023: 56,042.35
  • 2022: 57,489.49

• Current Liabilities (₹ crore):

  • 2024: 80,883.38
  • 2023: 74,871.13
  • 2022: 74,447.39

• Current Ratio:

  • 2024: 0.81
  • 2023: 0.75
  • 2022: 0.77

Asset Quality Metrics #

• Allowance for Doubtful Debts to Trade Receivables Ratio:
  • 2024: 2.21%
  • 2023: 3.34%

Debt Structure and Maturity Profile (Consolidated) #

• Debt-Equity Ratio:
  • 2024: 0.60
  • 2023: 1.13
• Interest Coverage Ratio:
  • 2024: 8.75
  • 2023: 3.03

Off-Balance Sheet Items #

• Contingent Liabilities: I 7,405.36 crore as of March 31, 2024 (excluding the claims where the corporation has recourse for recovery)
• Capital Commitments: I 8,166.69 crore as of March 31, 2024
• Guarantees: Performance Guarantees/Counter-Indemnities/Letter of undertakings and Debt Service Undertaking have been issued.

Specific comments on Standalone Financial Statements. #

Statutory auditors appointed by the Comptroller and Auditor General of India under section 139(5) of the Act, have expressed modified opinion on the Standalone Ind AS Financial Statements for the year ending March 31, 2024. The audit reports is appended.

Further, the Comptroller and Auditor General of India has stated that nothing significant has come to their knowledge which would give rise to any comment upon or supplement to statutory auditors’ report under section 143(6)(b) of the Act.

Specific comments on Consolidated Financial Statements. #

Statutory auditors appointed by the Comptroller and Auditor General of India under section 139(5) of the Act, have expressed modified opinion on the Consolidated Financial Statements for the year ending March 31, 2024. The audit reports is appended.

Further, the Comptroller and Auditor General of India has stated that nothing significant has come to their knowledge which would give rise to any comment upon or supplement to statutory auditors’ report under section 143(6)(b) of the Act.

Bharat Petroleum Corporation Limited (BPCL) Financial Analysis: FY 2023-24 #

Revenue Breakdown by Segment/Geography #

• FY 2023-24 Revenue from Operations: ₹5,06,911.36 crore (decrease from ₹5,33,467.55 crore in FY 2022-23).
• Segment Revenue (FY 2023-24):
  • Downstream Petroleum: ₹5,06,804.41 crore
  • E&P: ₹188.19 crore
• Geographic Revenue (FY 2023-24):
  • Domestic Operations: ₹5,01,468.60 crore
  • Other Countries: ₹5,523.94 crore
• Refinery Throughput (FY 2023-24): Highest ever at 39.93 MMT, with capacity utilization of 112% (vs. 109% in FY 2022-23).
• Market Sales Volume (FY 2023-24): Increased 4.33% to 51.04 MMT from 48.92 MMT in FY 2022-23.
• Marketing Highlights (FY 2023-24):
  • Highest ever sales volume and market share achieved.
  • MS retail business market share increased by 0.22%.
  • CNG market share increased to 30.57% with 278 CNG stations commissioned.
  • Ethanol blending reached 11.70% (up from 10.60%).
  • 18 Company Owned Company Operated (COCO) Outlets commissioned.
  • 809 New Retail Outlets (NROs) added, totaling 21,840.
  • LPG segment: 9.35 Crore customers.
    • 18.54 lakh new customers enrolled under Ujjwala 2.0.
    • 9.26 lakh customers upgraded to double bottling connections.
    • Highest ever packed LPG sales of 7,928 TMT, a growth of 3.37%.

Cost Structure Analysis #

• Cost of Materials Consumed (FY 2023-24): ₹2,12,853.15 crore (decrease from ₹2,34,305.39 crore in FY 2022-23).
• Purchases of Stock-in-Trade (FY 2023-24): ₹1,65,232.84 crore (decrease from ₹1,99,884.14 crore in FY 2022-23).
• Employee Benefits Expense (FY 2023-24): ₹3,558.48 crore (increase from ₹2,763.97 crore).
• Finance Costs (FY 2023-24): ₹2,473.01 crore (decrease from ₹3,216.48 crore).
• Depreciation and Amortization (FY 2023-24): ₹6,750.11 crore (increase from ₹6,347.48 crore).
• Other Expenses (FY 2023-24): ₹24,203.32 crore (decrease from ₹26,189.75 crore).

Margin Analysis #

• Gross Refining Margin (GRM) FY 2023-24: $14.14/bbl
• EBITDA Margin FY 2023-24: 9.1% (increase from 2.5% in FY 2022-23).
• Net Profit Margin FY 2023-24: 5.26% (increase from 0.35% in FY 2022-23).
• Standalone net profit FY 2023-24: ₹26,673.50 crore (increase from ₹1,870.10 crore).

Non-Recurring Items #

• Exceptional Items FY 2023-24: Expenses of ₹1,798.02 crore (compared to ₹1,359.96 crore in FY 2022-23).

EPS Analysis #

• Basic and Diluted EPS FY 2023-24: ₹125.21 per share (increase from ₹8.78 per share in FY 2022-23).
• Consolidated group EPS FY 2023-24: ₹126.08.

Quarterly Trends #

• Strong Q1 performance in FY 2023-24 and sustained growth throughout the year.
• Foundation Stone of Bina Petchem Refinery Expansion Project laid on September 14, 2023.

BPCL Financial Analysis: Cash Flow and Liquidity #

Operating, Investing, and Financing Activities (Standalone) #

Operating Activities (OCF) #

FY 2023-24 saw an OCF inflow of ₹35,762.21 crore, a significant increase from ₹10,664.05 crore in FY 2022-23. This was primarily driven by a higher profit before tax and adjustments for non-cash items like depreciation and finance costs.

Investing Activities (ICF) #

An outflow of ₹11,661.16 crore in FY 2023-24, compared to an outflow of ₹6,397.31 crore in FY 2022-23. This was due to increased capital expenditures in Property, Plant and Equipment & Intangibles.

Financing Activities (FCF) #

An outflow of ₹25,466.04 crore in FY 2023-24, compared to an outflow of ₹3,665.87 crore in FY 2022-23, largely due to significant repayment of long-term borrowings and dividend payouts.

Capex Analysis #

Total capital expenditure (including investments in Subsidiaries, JVCs, and Associates) was ₹11,702.05 crore in FY 2023-24, a slight decrease from ₹12,120.33 crore in FY 2022-23.

Dividend and Share Buyback Trends #

Dividend #

BPCL declared a final dividend of ₹21 per share (pre-bonus), translating to ₹10.50 per share (post-bonus), amounting to ₹4,555.43 crore. BPCL also declared an interim dividend totaling to ₹4,555.43 crore. Total dividend for the financial year, including the interim payout, was ₹42 per share - a 950% increase compared to FY 2022-23.

Share Buyback #

No share buyback program is directly mentioned for FY 2023-24. However, shares held by the BPCL ESPS Trust were sold, which could have a similar effect to a share buyback in terms of reducing outstanding shares.

Debt Service Coverage (Standalone) #

EBITDA of ₹47,115 crore, and finance cost of ₹2,473.01 crore.

Liquidity Position #

Current Ratio (Standalone) #

0.88 for FY 2023-24, increased from 0.77 in FY 2022-23.

Financial Analysis: Key Performance Indicators (3-Year Trends) #

Profitability Ratios #

Return on Capital Employed (ROCE) (Standalone) #

• FY 2023-24: 34.07%
• FY 2022-23: 3.99%
• FY 2021-22: 26.6%

Analysis: ROCE fluctuated significantly, with a massive increase in FY 2023-24 that deviated the most from the two prior years.

Return on Net Worth (ROE) (Standalone) #

• FY 2023-24: 35.72%
• FY 2022-23: 3.6%
• FY 2021-22: 21.4%

Analysis: BPCL’s ROE shows substantial fluctuation. FY 2023-24 shows an extraordinary increase from the lower returns, returning the company to historical performance.

Return on Capital Employed(ROCE) (Consolidated) #

• FY 2023-24: 31.73%
• FY 2022-23: 2.02%
• FY 2021-22: 22.8%

EBITDA Margin (Standalone) #

• FY 2023-24: 9.3%
• FY 2022-23: 2.5%
• FY 2021-22: 5.5%

Analysis: The EBITDA margin improved significantly in FY 2023-24, exceeding the previous two years.

Net Profit Margin (Standalone) #

• FY 2023-24: 5.26%
• FY 2022-23: 0.35%
• FY 2021-22: 2.7%

Analysis: Net profit margin significantly increased in FY 2023-24, showing a massive spike from a very low base.

Liquidity Metrics #

Current Ratio (Standalone) #

• FY 2023-24: 0.88
• FY 2022-23: 0.77
• FY 2021-22: 0.80

Analysis: The current ratio improved slightly in FY 2023-24, indicating a small improvement to meet short-term obligations, but it remains below 1, which could indicate liquidity constraints.

Efficiency Ratios #

Inventory Turnover Ratio (Standalone) #

• FY 2023-24: 29.21 days
• FY 2022-23: 27.52 days
• FY2021-22: 25.67

Analysis: The inventory turnover ratio slightly decreased in FY 2023-24 indicating slightly slower inventory movement.

Debtors Turnover Ratio (Standalone) #

• FY 2023-24: 5.43 days
• FY 2022-23: 5.63 days
• FY 2021-22: 6.55

Analysis: The debtors turnover ratio improved slightly, indicating a marginal improvement in the speed of collecting receivables.

Leverage Metrics #

Debt-Equity Ratio (Standalone) #

• FY 2023-24: 0.25
• FY 2022-23: 0.69
• FY 2021-22: 0.65

Analysis: BPCL’s debt-equity ratio improved significantly in FY 2023-24, demonstrating reduction in financial leverage.

Interest Coverage Ratio (Standalone) #

• FY 2023-24: 15.97
• FY 2022-23: 1.91
• FY 2021-22: 10.98

Analysis: The interest coverage ratio drastically improved in FY 2023-24, indicating a much stronger ability to cover interest expenses with operating profits.

Working Capital Ratios #

Debtor Days (Standalone) #

• FY 2023-24: 5.43 days
• FY 2022-23: 5.63 days
• FY2021-22: 6.55

Analysis: The number is negligible. The corporation receives payment for goods, almost immediately.

Industry Comparison and Deviations #

The report lacks direct peer comparables for a granular, ratio-by-ratio comparison. However, it’s stated that BPCL achieved the “Highest GRM among Public Sector Undertakings Oil and Marketing Companies (PSU OMCs)” for FY 2023-24 and the previous year. This suggests a superior refining performance relative to direct PSU competitors. The significant increase in profitability ratios, and the substantial reduction in the debt-equity ratio, is very significant, implying that BPCL performed well above average.

The report does state a market share gain and a higher sales volume, with a market share of 27.57% among PSU OMCs, retaining its position as the second-largest OMC during the year. This signifies BPCL performance.

Business Segment Performance Analysis #

Refineries #

Revenue and Profitability Metrics with Growth Rates #

• Achieved the highest-ever crude throughput of 39.93 MMT in FY 2023-24, a growth of 3.63% from 38.53 MMT in FY 2022-23.
• Capacity utilization was 112% in FY 2023-24, compared to 109% in the previous year.
• Recorded the highest GRM amongst PSU OMCs at $14.14/bbl, a decrease from $20.24/bbl.

Market Share and Competitive Position #

• Maintained the highest GRM amongst PSU OMCs for the second consecutive year.
• BPCL GRMs are at a premium to benchmark Singapore GRMs for the past four financial years.

Key Products/Services Performance #

• Started production of 100N Lube Oil, D40/D100/D130 industrial solvents, anode-grade green pet coke.
• Launched Environmental Protection Agency (EPA) grade diesel.
• Production of Army Grade Kerosene (Low Smoke Low Aromatic Superior Kerosene Oil [SKO]) commenced at BR.

Segment-Wise Capex #

• Ethylene Cracker Project at Bina:
  • Technology licensors for all critical packages and project management consultants for refinery expansion and downstream units have been onboarded.
  • The project is on track as per the planned milestones, with potential commissioning planned in 2028.
  • Final Investment Decision(FID) of ₹ 54,000 crore.
• Polypropylene Project at Kochi Refinery
  • The project is on track for commissioning in 2027.
  • FID of ₹ 4,460 crore.

Operational Efficiency Metrics #

• Implemented energy reduction initiatives, saving 1.05 lakh MTOE/annum with potential CO2 emission reduction of 3.4 lakh tonnes CO2/Year.
• Refineries are digitally enabled with new technologies as per Industry 4.0, such as AI/ML-based predictive analytics of critical equipment, augmented reality-based remote maintenance of equipment, robotic inspection of tanks, and process automation for repetitive tasks.
• Process digital twins have been deployed, enhancing informed decision-making, safety, and reliability.
• Nil LTA for employees and contract workers in all three refineries.

Growth Initiatives and Challenges #

• Bina Petchem Refinery Expansion Project (BPREP) foundation stone laid on September 14, 2023, expanding refining and petrochemical production capabilities.
• Commissioned a 5 MW electrolyzer-based ‘Green Hydrogen Plant’ at BR.
• Commissioned one of the biggest solar power projects through a 14 MW Solar Power Project at BR.
• Planning to increase capacity by 2.4 MMTPA by FY 2028-2029, enhancing petrochemical intensity up to 8%.
• Evaluating options for setting up additional integrated refining and petrochemical capacities.
• Plan to expand capacity to 45 MMTPA with creeping expansion of Mumbai and Kochi refineries and expansion of Bina refinery.

Retail #

Revenue and Profitability Metrics with Growth Rates #

• Market sales: 32.7 MMT, the highest absolute market share amongst PSUs in the last 10 years.
• Market share of 30.57% in CNG with a growth of 1.54% in FY 2023-24.
• Achieved Ethanol Blending of 11.7%.

Market Share and Competitive Position #

• Attained a market share of 29.68% in MS and 29.83% in HSD, reflecting growth over the past five years.
• Expanded EV charging stations network to 3135, including 900 fast chargers across 120 highway corridors.

Key Products/Services Performance #

• Launched a new formulation for ‘Speed’ with unique friction modifier technology.
• ‘UFill 2.0’ launched as a customer-centric digital solution.
• Commissioned a new depot at Bokaro.
• Increased ethanol tankage from 112 TKL to 135 TKL.

Geographic Distribution and Market Penetration #

• Serving the entire length and breadth of the country.
• Strong network of 21,840 retail outlets.
• Commissioned 809 New Retail Outlets.
• Expanded the retail network for E20 fuel to 4,279 outlets.

Segment-Wise Capex #

• ₹20,000 crores capex allocated to the marketing segment as part of ‘Project Aspire’.

Operational Efficiency Metrics #

• IRIS platform integrated across 20,500+ Retail outlets, 75+ terminals, 50+ LPG plants, and 14,500+ Tank Lorries.
• #silentvoices initiative launched, providing employment to Speech & Hearing Impaired (SHI) individuals at Retail Outlets.

Growth Initiatives and Challenges #

• Plans to commission 4,000 NROs in the next five years.
• Aims to install 4-wheeler fast chargers at approximately 6,000 retail outlets across 400 highway corridors.
• Strategic foray into the F&B sector through ‘BeCafe’, with plans to set up 500 BeCafes.
• Target to have EV charging stations at approximately 7,000 retail outlets.

LPG #

Revenue and Profitability Metrics with Growth Rates #

• Achieved the highest-ever sales of 7,928 TMT.

Market Share and Competitive Position #

• Serving over 9.35 crore customers.
• Enrolled 18.54 lakh new customers under Ujjwala 2.0 and 9.26 lakh customers upgraded to double bottling connections.

Key Products/Services Performance #

• Pilot of ‘Pure for Sure’ initiative launched with tamperproof seals and QR codes.

Geographic Distribution and Market Penetration #

• A strong network of 6,252 distributors.
• 37 regular and 66 non-domestic new distributors added to the network.

Operational Efficiency Metrics #

• Achieved the highest ever bottling volume of 7,939 TMT with capacity utilization of 100%.
• Piloted automation of the entire LPG bottling operations in the Bengaluru LPG plant.

Growth Initiatives and Challenges #

• Signed a 15-year agreement with GAIL for the supply of 600 TMTPA of propane.

Lubricants #

Revenue and Profitability Metrics with Growth Rates #

• MAK registered highest-ever sales volumes of 446 TMT, a growth of 16%.

Key Products/Services Performance #

• Launched a novel adjuvant oil for the Agri Sector (Tea & Banana).
• Introduced a new product range of Synthetic Lubricants for the Car segment, which is Ethanol 20 compliant.
• Introduced 19 new grades and 60 new SKUs.
• Launched new packaging from recycled plastic containers, bamboo bottles, and tin cans.

Market Share and Competitive Position #

• Established footprint in Africa, entering Kenya, Uganda, and Tanzania.
• Commissioned a new channel partner in Sri Lanka.

Operational Efficiency Metrics #

• Strengthened MAK QR Code.
• Launched MAKonnect.

Aviation #

Revenue and Profitability Metrics with Growth Rates #

• Achieved sales of 1,901 TMT, a growth of 9.40%.

Market Share and Competitive Position #

• Achieved a market share of 25.20% among OMC PSUs.
• 43.60% of sales from the domestic segment and 53.50% from the international segment.

Key Products/Services Performance #

• Hydrant Refuelling system operations commenced at Manoharlal International airport at MOPA Goa.
• New AFS commissioned at Jabalpur.

Growth Initiatives and Challenges #

• MOU signed with YIAPL for an ATF pipeline from Piyala to the upcoming Noida International airport at Jewar.
• Working with the R&D team to meet the CORSIA mandate of blending Sustainable Aviation Fuel.

Gas #

Revenue and Profitability Metrics with Growth Rates #

• Supplied 1,857 TMT of gas in FY 2023-24.

Market Share and Competitive Position #

• Present, directly and through joint ventures, in 52 GAs covering 154 districts of India.

Key Products/Services Performance #

• Won J&K and Leh-Ladakh GA in 12/12A CGD round.

Geographic Distribution and Market Penetration #

• Strong network of 26 GAs standalone and 26 GAs through JVs.

Segment-Wise Capex #

• ₹1,920 crore of capex spent in FY 2023-24 in the expansion of CGD networks.

Operational Efficiency Metrics #

• Mechanically commissioned 671 CNG stations, added 3.31 lakh domestic PNG connections, and laid 2,348 inch-km of steel pipeline as on March 31, 2024.
• Rolled out IOT based automation at CNG stations.

Growth Initiatives and Challenges #

• Sourced an equivalent of 22 cargoes under long-term contracts, 6 TMT through e-bidding, 6 TMT through RLNG tenders and 84 TMT from Indian Gas Exchange (IGX).
• Renewed/signed 73 MoUs/contracts with 1.10 MMT volume.
• Plan to invest nearly ₹2,500 crores in FY 2024-25.
• Plan to triple footprint by FY 2028-2029.
• Aim to set up trading capabilities and support it with storage facilities.

I&C #

Revenue and Profitability Metrics with Growth Rates #

• Surpassed 7 MMT of sales.

Key Products/Services Performance #

• Successful launch of new De-Aromatized Solvents (DAS) variants.
• Achieved REACH compliance for D80.

Market Share and Competitive Position #

• Major inroads into State Transport Undertaking (STU) business.
• Commissioned 32 Consumer pumps and 2 railway consumer depots.

Operational Efficiency Metrics #

• Launched one-stop portal for I&C customers in HelloBPCL.

Renewables #

Key Products/Services Performance #

• Awarded a Green Hydrogen tender by SECI with a production capacity of 2,000 tonnes per annum through biomass-based pathways.
• Solar projects of 18 MWp at Bina and 4.60 MWp floating at Kochi commissioned.
• Work commenced for setting up an integrated Green Hydrogen plant and Hydrogen refueling station at Kochi along with CIAL.

Segment-Wise Capex #

• ₹1,299.58 crore capex in renewable energy projects sanctioned in FY 2023-24.

Growth Initiatives and Challenges #

• Board approved two wind projects of 50 MW each in MP and Maharashtra and a 71 MWp solar project at Prayagraj at a total investment of ₹ 1,274 crore.
• BPCL’s first green hydrogen plant of 5 MW electrolyzer capacity is being implemented in Bina refinery.
• Target to build 2 GW of renewable energy capacity by 2025 and 10 GW by 2035

Overall Performance #

Revenue and Profitability Metrics with Growth Rates (Group) #

• Gross Revenue from Operations: ₹5,06,992.60 crore in FY 2023-24, a decrease of 5% as against ₹5,33,547.29 crore in FY 2022-23.
• Net Profit attributable to BPCL: ₹26,858.84 crore in FY 2023-24, up significantly from ₹2,131.05 crore in FY 2022-23, an increase of 1160.36%.
• Basic Earnings Per Share: ₹126.08 in FY 2023-24, compared to ₹10.01 in FY 2022-23.
• EBITDA Margin: 9.29% in FY2023-24, compared to 2.52% in FY 2022-23.

Market Share and Competitive Position #

• Overall market share of 27.57% among PSU OMCs.

Segment-Wise Capex and ROIC #

• Planned capex of ₹1.70 lakh crore over the next five years, allocated across different segments.

Operational Efficiency Metrics #

• Highest ever market sales of 51.04 MMT.
• Highest ever refinery crude throughput of 39.93 MMT.

Growth Initiatives and Challenges #

• ‘Project Aspire’ with a planned capex outlay of around ₹1.70 lakh crore over five years.
• Net-zero roadmap for Scope 1 & Scope 2 emissions by 2040, requiring a phased capital outlay of approximately ₹1 lakh crore.
• Focus on expanding refining capacity and developing integrated petrochemical complexes.
• Expanding retail footprint and enhancing customer-centric initiatives

Risk Framework #

Refineries Segment #

Strategic Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Onboarding technology licensors and project management consultants; site work commenced.
• Control Effectiveness: Partially effective
• Potential Financial Impact: Substantial

Operational Risks #

• Severity: Medium to High
• Likelihood: Low to medium
• Trend: Stable
• Mitigation Strategies: Process optimization, implementation of new technologies (AI/ML, robotic inspection), diversification of crude basket, and energy reduction initiatives.
• Control Effectiveness: High
• Potential Financial Impact: Moderate

Financial Risks #

• Severity: Medium
• Likelihood: High
• Trend: Stable/variable
• Mitigation Strategies: Crude oil procurement optimization, and risk mitigation with respect to refining margins, freights, and structural products.
• Control Effectiveness: Partially effective
• Potential Financial Impact: Moderate to High

Compliance/Regulatory Risks #

• Severity: Medium
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Adherence to licensing standards.
• Control Effectiveness: High
• Potential Financial Impact: Low

Emerging Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Net-zero roadmap includes renewable power, green hydrogen, compressed biogas, Carbon Capture, Utilization, and Storage (CCUS).
• Control Effectiveness: Developing
• Potential Financial Impact: ₹1 lakh crore phased capital outlay until 2040.

Retail Segment #

Strategic Risks #

• Severity: Medium
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies: Growing retail footprint, customer-centric initiatives (‘Pure for Sure’), co-branded cards, premium fuel offerings.
• Control Effectiveness: Partially effective
• Potential Financial Impact: Medium

Operational Risks #

• Severity: Medium
• Likelihood: Low to Medium
• Trend: Stable
• Mitigation Strategies: ‘UFill’ digital solutions, integration with IRIS for remote management, expansion of EV charging stations.
• Control Effectiveness: Moderate to High
• Potential Financial Impact: Moderate

Financial Risks #

• Severity: low
• Likelihood: High
• Trend: Variable
• Mitigation Strategies: Strategic positioning in CNG and Ethanol-blended fuels.
• Control Effectiveness: Moderate
• Potential Financial Impact: Moderate

Emerging Risk #

• Severity: High
• Liklihood: Medium
• Trend: Increasing
• Mitigation Strategies: Development of robust charging infrastructure for EVs.
• Control Effectiveness: Moderate
• Potential Financial Impact: Increase in revenue

LPG Segment #

Operational Risks #

• Severity: High
• Likelihood: Medium
• Trend: Improving
• Mitigation Strategies: ‘Pure for Sure’ initiative with tamper-proof seals and QR codes.
• Control Effectiveness: Early stages
• Potential Financial Impact: Moderate

Financial Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Expanding customer base (Ujjwala 2.0), promoting double bottling connections.
• Control Effectiveness: High
• Potential Financial Impact: Medium

Strategic Risks #

• Severity: High
• Liklihood: High
• Trend: Increasing
• Mitigation Strategies: Signed a 15 year agreement with GAIL for supply of 600 TMTPA of propane at an estimated value of I 63,000 crore.
• Control Effectiveness: Moderate
• Potential Financial Impact: High

Lubricants (MAK Lubricants) Segment #

Operational Risks #

• Severity: Medium
• Likelihood: Low to medium
• Trend: Improving
• Mitigation Strategies: Introduction of new grades and SKUs, development of novel products.
• Control Effectiveness: High
• Potential Financial Impact: Low

Financial Risks #

• Severity: low to medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Geographic diversification (Africa, Sri Lanka).
• Control Effectiveness: Moderate
• Potential Financial Impact: Limited

Aviation Segment #

Operational Risks #

• Severity: High
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Adherence to International Quality Standards, investments in infrastructure.
• Control Effectiveness: High
• Potential Financial Impact: Low

Financial Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Fluctuating
• Mitigation Strategies: Diversification of customer base (domestic and international segments).
• Control Effectiveness: Moderate
• Potential Financial Impact: Medium

Gas Segment #

Strategic Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Strategic expansion into high-opportunity Geographical Areas (GAs).
• Control Effectiveness: Moderate
• Potential Financial Impact: Substantial

Operational Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies: Diversified sourcing through long-term contracts, e-bidding, RLNG tenders, and Indian Gas Exchange.
• Control Effectiveness: Moderate
• Potential Financial Impact: Moderate

Upstream (Exploration & Production) Segment #

Strategic Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Partnerships with global players (TotalEnergies, ONGC, Rosneft, etc.).
• Control Effectiveness: Uncertain
• Potential Financial Impact: High

Operational Risks #

• Severity: High
• Likelihood: Variable
• Trend: Dependent on project progress
• Mitigation Strategies: Not specified
• Control Effectiveness: Uncertain
• Potential Financial Impact: High

Renewables Segment #

Strategic Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Investment in wind and solar projects, Green Hydrogen initiatives.
• Control Effectiveness: Developing
• Potential Financial Impact: Significant

Operational Risks #

• Severity: Low
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Technology collaborations (indigenous alkaline electrolyzer with BARC).
• Control Effectiveness: Developing
• Potential Financial Impact: Moderate

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

• Refineries: Aims to expand capacity to 45 MMTPA through expansions. Announced new petrochemical projects in Bina and Kochi, leveraging integrated refinery and petrochemical operations, and is on track with planned milestones and commissioning.
• Retail: Targets market leadership across all business segments through brand building, premiumization, quality focus, research and development, and infrastructure expansion.
• LPG: Focuses on maintaining market leadership by ensuring the uninterrupted supply of clean cooking fuel and expanding the customer base.
• Gas: Aims to triple its footprint by FY 2028-29, focusing on optimal infrastructure build-out in City Gas Distribution (CGD), and is exploring acquisitions.
• Petrochemicals: Targets a capacity increase of 2.4 MMTPA and a petrochemical intensity of up to 8% by FY 2028-29.
• Green Energy: Plans for 2 GW of renewable energy capacity by 2025 and 10 GW by 2035. Targets 7,000 EV charging stations by 2025.
• Upstream: Aims to commercialize upstream asset base by moving them to production, targeting profitability and positive cash flow.
• Overall: “Project Aspire” with a planned capex outlay of around ₹1.70 lakh crore over five years aims to create long-term stakeholder value, and reach net-zero emissions (Scope 1 & 2) by 2040 through a phased capital outlay of approximately ₹1 lakh crore.

Competitive Advantages and Market Positioning #

• Refineries: Operates three strategically located refineries with a cumulative nameplate capacity of 35.3 MMT, supplemented by cost-effective integrated pipeline networks. Recorded the highest GRMs amongst PSU OMCs for the second consecutive year, with GRMs at a premium to benchmark Singapore GRMs for the past four financial years.
• Retail: Holds the second-largest market share among PSU OMCs (27.57% as of March 31, 2024) and is a trusted brand in the country.
• LPG: “Bharatgas” is a leading LPG supplier in India, with a customer base of over 9.35 crore.
• Lubricants: “MAK” is a renowned lubricants brand, delivering top-notch performance.
• Aviation: A pioneer in providing Aviation fuel services in India for over 75 years.
• Gas: Prominent and trusted supplier of natural gas and present in 52 GAs, directly and through JVs, covering 154 districts.
• R&D: Multiple awards and patent filings in FY24, showing R&D poweress.

Innovation Initiatives and R&D Effectiveness #

• Refineries: Digitally enabled with new technologies per Industry 4.0, like AI/ML-based predictive analytics, augmented reality-based remote maintenance, robotic inspection, and process automation. Started production of unique industrial solvents (D40/D100/D130) and 100 N Lube Oil.
• Retail: Launched “UFill 2.0,” and multiple other digital intitiatives, enhancing customer-centric solutions.
• LPG: Launched the ‘Pure for Sure’ initiative with tamperproof seals and QR codes. Introduced digital initiatives, including an AI Chatbot-enabled IVR calling system and biometric eKYC.
• Lubricants: Launched MAKonnect (integrated secondary sales management platform) and strengthened the MAK QR Code for bottle tracking and customer rewards.
• Gas: Rolled out IoT-based automation at CNG stations and implemented a salesforce CRM solution.
• R&D: CRDC focuses on sustainability, expanding petrochemical offerings, exploring alternative energy sources, leveraging digital technologies, and improving refining processes. Developed an indigenous alkaline electrolyzer. Won multiple awards for innovations like BharatH2Sep and HiGee technologies.

Mergers and Acquisitions (M&A) Strategy and Execution #

• BORL & BGRL amalgamated with BPCL to improve synergies.

Management’s Track Record in Execution #

• Refineries: Achieved the highest-ever crude throughput of 39.93 MMT and 112% capacity utilization.
• Retail: Achieved the highest-ever market sales volume of 51.04 MMT and highest absolute market share amongst PSUs in the last 10 years.
• LPG: Achieved the highest-ever sales of 7,928 TMT and enrolled 18.54 lakh new customers under Ujjwala 2.0.
• Lubricants: MAK registered the highest-ever sales volumes of 446 TMT with a growth of 16%.
• Aviation Achieved a sales of 1,901 TMT registering a growth of 9.40%.
• Gas: Awarded one Geographical Area (GA) in Jammu & Ladakh and one GA in Arunachal Pradesh.
• Renewables: Awarded a Green Hydrogen tender by SECI with a production capacity of 2,000 tonnes per annum.
• Overall: Achieved the highest-ever standalone net profit of ₹26,673.50 crore.

Capital Allocation Strategy #

• Planned capex outlay of around ₹1.70 lakh crore over five years under “Project Aspire”.
• Allocations include: ₹75,000 crore for Refineries and Petrochemicals, ₹25,000 crore for CGD/Gas, ₹32,000 crore for Upstream, ₹20,000 crore for Marketing, ₹10,000 crore for Green Energy, and ₹8,000 crore for the Pipeline Network.
• A phased capital outlay of approximately ₹1 lakh crore till 2040 for Net Zero projects
• FY 2023-24: Announced two new petrochemical projects in Bina and Kochi with a capital outlay of ₹ 54,000 crore.
• Investing nearly ₹1,000 crore to establish two 50 MW captive wind power plants.
• Investing around ₹300 crore in 72 MWp of solar project in Prayagraj, Uttar Pradesh.

Organizational Changes and their Impact #

• Onboarded a large group of young professionals and is recruiting a diverse pool of candidates.
• Investing in upskilling & reskilling programs and launched a new digital learning platform.
• Established a Center of Excellence to build functional capabilities.
• Amalgamation of BORL & BGRL with BPCL to improve synergies.

ESG Analysis of Bharat Petroleum Corporation Limited (BPCL) #

Environmental Metrics and Targets #

• GHG Emissions Reduction: BPCL achieved a reduction of 8.64 MMTCO2e in GHG emissions. Scope 1 and 2 Emission Intensity was 20.77 MTCO2e/crore (₹) of revenue from operations. Scope 3 Emission Intensity was 299.36 MTCO2e/crore (₹) of revenue for operations.
• Net Zero Target: BPCL aims for Net Zero in Scope 1 and Scope 2 emissions by 2040, with a phased capital outlay of approximately ₹1 lakh crore.
• Renewable Energy: Renewable energy constitutes 4.40% of the total electricity consumed by BPCL in operating locations.
• Renewable Energy Capacity: BPCL targets 2 GW of renewable energy capacity by 2025 and 10 GW by 2035.
• Water Recycling: 10,198 TKL of wastewater was recycled.
• Rainwater Harvesting: 640 TKL of rainwater was harvested, with a catchment area of 13.49 lakh sqm, a 12.89% year-over-year increase.
• Plastic Disposal: 4,891 MT of plastic was disposed of under EPR.
• Carbon Sequestration: 23,600 MTCO2e of carbon was sequestered via tree plantation.

Social Responsibility Programs #

• CSR Spend: Total CSR spend was ₹158.19 crore, with ₹6.23 crore spent in 25 aspirational districts across 10 states.
• Beneficiaries: CSR initiatives reached 71,52,010 total beneficiaries.
• Vulnerable Group Focus: 64% of health and sanitation beneficiaries and 72% of education beneficiaries were from vulnerable and marginalized groups. Environmental sustainability initiatives had 100% of beneficiaries from these groups.
• Employee Initiatives: 95% employee participation was present for an online role aspiration portal.

Governance Structure and Effectiveness #

• Board Composition: The Board consists of 13 directors: 5 Whole-time (Executive), 2 Non-Executive Nominee, and 6 Non-Executive Independent Directors.
• Board Committees: There are Board Committees including Audit, Corporate Social Responsibility, Project Evaluation, Nomination and Remuneration, Stakeholder Relationship, Risk Management, and Sustainable Development. All Board level committees are headed by Independent Directors.
• Policies: The Board has implemented numerous policies, including HSE, CSR, Whistleblower, Code of Conduct, and Human Rights policies.
• Stakeholder Engagement: BPCL engages with both internal (employees, shareholders) and external stakeholders (suppliers, customers, media, communities, regulators).
• Vigilance: 120 vigilance awareness sessions were conducted, covering 3,277 persons. 99.82% of customer complaints were closed.

Sustainability Investments and ROI #

• Capex in Renewable Energy: BPCL sanctioned ₹ 1,299.58 crore in capex for renewable energy projects in FY 2023-24.
• Green Hydrogen: BPCL has been awarded a Green Hydrogen Tender by SECI with a production capacity of 2,000 tonnes per annum.

ESG Ratings and Peer Comparison #

• DJSI Ranking: BPCL holds the #8 global ranking in the Dow Jones Sustainability Index (DJSI) in the Oil and Gas sector, maintaining a top position among Indian oil and gas companies for the past four years.
• MSCI Rating: Received a ‘BB’ MSCI rating, higher than the Indian peer group in the Oil and Gas sector.
• CDP Ranking: Ranked B- on CDP, placing BPCL in the Management Level and matching their Global Peer Group in the Oil and Gas Sector.

Regulatory Compliance and Future Preparations #

• Environmental Compliance: All operating marketing and refinery locations, except Kochi Refinery (expected by September 2024), are certified ‘Zero waste to landfill’.
• Human Rights Policy: Framed and published on the public domain.
• POSH Committee: Exists at the corporate, regional, and refinery level.
• PIDPI: Public Interest Disclosure & Protection of Informer Resolution is implemented across BPCL.

Future Outlook for Bharat Petroleum Corporation Limited (BPCL) #

Management Guidance and Assumptions #

• Continued focus on upstream oil & gas projects, mainly in the early stages of monetization in Mozambique and Brazil.
• Global economic growth is expected to be moderate, supported by domestic demand and capital investment.
• Commitment to long-term sustainable success and protection of stakeholders’ interests.
• Focus on growing BPCL’s core businesses (refining, marketing petroleum products, upstream) and “Future Big Bets” (petrochemicals, gas, green energy, non-fuel retail, and digital).
• Risk management approach to manage financial and non-financial risks.
• Commitment to achieve Net Zero by 2040 for Scope 1 and Scope 2 emissions.
• Consideration of long-term oil price forecasts.
• Expectation to sharply reduce energy imports by 2030.
• Planned capacity utilization for FY 2023-24 was 112%.
• Aim to be the first choice for customers, leveraging talent and technology, to be the most admired global energy company, and to be role models for implementing efficient health, safety, security, and Environment initiatives.
• Aim to meet 7-10% of the nation’s primary energy demand by 2047.

Market Growth Forecasts #

• Global GDP growth is expected to remain steady at 3.2% in 2024 and 3.3% in 2025.
• Global Manufacturing PMI rose to a 22-month high in May, suggesting a steady improvement.
• Global headline inflation is projected to decline to 5.9% in 2024 and 4.5% in 2025.
• Global trade is expected to rebound in 2024 and 2025.
• Indian GDP growth is projected at 7.2% in 2024-25, with industry playing a pivotal role.
• Petroleum product consumption in India is expected to rise steadily by 4-5% annually.
• Demand for major petrochemical products is expected to rise by 7-8% annually.
• Gasoline demand globally is set to increase from 27 million bpd to 27.28 million bpd.
• Gasoil demand globally is expected to see a modest increase from 29.07 million bpd to 29.21 million bpd.
• India’s oil demand is projected to rise to 6.6 million bpd by 2030.
• India aims to raise refining capacity to 450 MMTPA.
• India’s Natural gas demand is expected to rise by 6% in 2024.
• India expects to raise its refining capacity to 450 MMTPA from 256 MMTPA.
• Ethanol blending with petrol reached 12.8% in March 2024, with a target to achieve 20% by 2025-26.
• India’s renewable energy capacity by 2030 is targeted for 500 GW.

Planned Strategic Initiatives #

• Project Aspire: A five-year strategic framework with two pillars: ‘Nurturing the Core’ and ‘Investing in Future Big Bets.’ This involves a planned capex outlay of approximately ₹1.70 lakh crore.
• Refineries & Petrochemicals: Brownfield expansion of Bina refinery capacity from 7.80 MMTPA to 11 MMTPA, including an Ethylene Cracker Project and a Polypropylene Project at Kochi Refinery. Actively evaluating options for additional integrated refining and petrochemical capacities.
• Gas: Plans to triple footprint in the City Gas Distribution (CGD) sector by FY 2028-29, explore acquisitions in high-opportunity Geographical Areas (GAs), and explore LNG regasification infrastructure.
• Upstream: Focus on the earliest possible monetization of discoveries in Mozambique and Brazil.
• Green Energy: Targeting 2 GW of renewable energy capacity by 2025, 10 GW by 2035. Plans include two 50 MW captive wind power plants and a 72 MWp solar project. Executing Green Hydrogen projects.
• Electric Mobility: Installation of over 3,000 charging stations, with a target of 7,000 EV charging stations by 2025, and partnerships with Tata Motors and MG Motors.
• Biofuels: Increased ethanol blending in petrol to 11.70%. Plans to operationalize 26 CBG plants and a bio-ethanol refinery.
• Non-Fuel Retail: Expansion of convenience stores, ‘BeCafe’ brand (500 locations in near future), and wayside amenities.
• Digital Ventures: Digital energy ventures to serve as incubators for energy innovations. Launch of ‘Pure for Sure’ for Bharatgas LPG cylinders.
• Corporate Venture Capital: Establishing a fund to invest directly in promising startups.

Capital Expenditure Plans #

• Total planned capex outlay of approximately ₹1.70 lakh crore over the next five years under ‘Project Aspire’.
• Refineries and Petrochemicals: ₹75,000 crore.
  • Ethylene Cracker Project at Bina: ₹49,000 crore, with commissioning planned in 2028.
  • Polypropylene Project at Kochi Refinery: ₹4,460 crore, with commissioning planned in 2027.
• CGD/Gas: ₹25,000 crore
• Upstream: ₹32,000 crore.
• Marketing: ₹20,000 crore.
• Green Energy: ₹10,000 crore (includes ~₹1,000 crore for two 50 MW wind power plants, ~₹300 crore for a 72 MWp solar project).
• Pipeline Network: ₹8,000 crore
• Net Zero roadmap (Scope 1 & 2 emissions by 2040): approximately ₹1 lakh crore phased capital outlay till 2040.

Efficiency Improvement Targets #

• Refining: Increase petrochemical intensity up to 8% by FY 2028-29.
• Gas: Triple footprint in CGD by FY 2028-29.
• Renewable Energy: 2 GW by 2025, 10 GW by 2035.
• Net-Zero: Net-zero emissions by 2040 for Scope 1 & Scope 2 emissions.
• Digital Interventions: Enhance operational efficiency through AI, ML, RPA, and digital twins.
• Energy Reduction Initiatives: Implemented measures saving 1.05 lakh MTOE/annum with potential CO2 emission reduction of 3.4 lakh tonnes CO2/year.

Potential Challenges and Opportunities #

• Challenges:

  • Geopolitical instability, leading to supply chain vulnerabilities and price volatility.
  • Inflationary pressures and restrictive monetary policies globally.
  • Lower product spreads and unfavorable crude oil prices impacting profits.
  • Competition from private players in the retail fuel market.
  • Technological advancements in renewable energy, that require robust upskilling & reskilling programs.
  • Fluctuations in demand for petroleum products.

• Opportunities:

  • India’s status as the world’s fastest-growing major economy.
  • Increasing domestic demand and investment in India.
  • Potential monetary easing by global central banks due to easing inflation.
  • India’s strategic objective to expand refining capacities and become a leader in petrochemical exports.
  • India’s transition to a low-carbon energy, creating opportunities in renewable power, green hydrogen, and compressed biogas.
  • Growing rural market.

Scenario Analysis and Sensitivity to Key Assumptions #

The financial analysis is sensitive to a number of key assumptions.

• Crude Oil Prices:

  • Favorable Scenario: Strong refining margins contribute to profitability.
  • Unfavorable Scenario: Lower product spreads and unfavorable crude oil prices negatively impact profitability.
  • Sensitivity: Profitability is directly linked to crude oil price fluctuations.

• Refining Margins:

  • Favorable Scenario: Strong GRMs significantly contribute to profitability.
  • Unfavorable Scenario: Lower product spreads can significantly decrease profits.
  • Sensitivity: GRMs are a key determinant of profitability, with fluctuations having a direct impact.

• Market Demand:

  • Favorable Scenario: Strong domestic demand and investment in India, along with increased petroleum product consumption, drive sales volumes.
  • Unfavorable Scenario: A slowdown in economic growth could reduce demand for petroleum products, impacting sales.
  • Sensitivity: Sales volumes are highly sensitive to economic growth and consumption patterns.

• Government Policies:

  • Favorable Scenario: Supportive government policies like the Ethanol Blending Program and National Green Hydrogen Mission create opportunities.
  • Unfavorable Scenario: Changes in government policies regarding fuel pricing, subsidies, or environmental regulations could significantly impact operations.
  • Sensitivity: Government policies have a direct influence on the operational and financial landscape.

• Interest Rates:

  • Favorable Scenario: Potential interest rate cuts could lower borrowing costs.
  • Unfavorable Scenario: High interest rates increase finance costs, reducing profitability.
  • Sensitivity: Finance costs and net profits are sensitive to interest rate changes.

• Renewable Energy Investments:

  • Favorable Scenario: Successful implementation of renewable energy projects can diversify the energy mix and reduce carbon footprint.
  • Unfavorable Scenario: Delays or cost overruns in renewable projects could hinder the achievement of Net Zero targets.
  • Sensitivity: The success and timely completion of renewable projects are crucial for long-term sustainability goals.

• Exchange Rates:

  • Favorable Scenario: A stable Indian Rupee relative to the US Dollar can reduce the cost of imported crude oil.
  • Unfavorable Scenario: Rupee depreciation against the US Dollar can increase the cost of crude oil imports.
  • Sensitivity: Import costs are directly impacted by exchange rate fluctuations.

Audit & Compliance Analysis: BPCL FY 2023-24 #

Auditor’s Opinion and Qualifications #

• The Statutory Auditors issued an unmodified opinion on the Standalone Ind AS Financial Statements.
• The Statutory Auditors issued an unmodified opinion on the Consolidated Ind AS Financial Statements.
• The auditors of the subsidiary BPRL included an Emphasis of Matter paragraph in their report.
• The Statutory auditors report contains observations on the absence of the required number of Independent Directors on the BPCL board, under regulation 17(1)(b) of SEBI.
• One comment of the C&AG was issued on supplementary audit, under section 143(6)(b), of the Companies Act.

Key Accounting Policies and Changes #

• BPCL prepares its financial statements in accordance with Indian Accounting Standards (Ind AS).
• The historical cost convention is used, except for specific assets and liabilities measured at fair value.
• There is a materiality threshold for Capital Work-in-progress, Capital stores and other specific items, for capitalization and allocation purposes.
• Useful lives of Property, Plant, and Equipment were reviewed, with some categories (e.g., electronic carousels, aviation refuelling equipment, dispensing pumps) having their estimated useful lives adjusted.
• The Corporation has applied the ‘simplified approach’ for measuring the expected credit losses of trade and other receivables, on the basis of weighted average loss rate.

Internal Control Effectiveness #

• BPCL maintains an internal financial controls system.
• The system is reviewed on an ongoing basis, and changes are made to align with business/statutory requirements.
• The Audit Committee reviews significant findings of the Internal Audit Department.
• The auditor’s report, referencing Section 143(3)(i) of the Companies Act, 2013 expresses an unmodified opinion on the adequacy and operating effectiveness of the internal financial controls over financial reporting.
• BPCL is assessed as having proper Board process and compliance mechanism in place.

Regulatory Compliance Status #

• BPCL has presented compliance with all applicable regulations as mentioned in statutory reports.
• BPCL did not have the required number of Independent Directors under SEBI regulations, from May 1, 2023, to March 31, 2024.
• BPCL used accounting software with an audit trail (edit log) feature, operational throughout the year, with no tampering instances identified.

Legal Proceedings and Potential Impact #

• BPCL discloses pending litigations and their potential impact on the financial position in its financial statements.
• The Corporation discloses details of disputed statutory dues that have not been deposited, including the forum where the dispute is pending.
• The exceptional expenses contain expenses caused by force majeure declared on the Mozambique Project
• There were no proceedings initiated or pending for holding benami property.

Related Party Transactions #

• BPCL entered into related party transactions in the ordinary course of business and on an arm’s length basis.
• Details of transactions with related parties are provided in Form AOC-2 (Annexure G).

Subsequent Events #

• The Board of Directors recommended the capitalization of a sum from the Securities Premium Account for issuing bonus equity shares in the proportion of 1:1.
• The corporation acquired the balance of 36.62% of Equity Shares in BORL vide a Share Purchase Agreement (SPA) with Joint Venture Partner OQ S.A.O.C.
• The Corporation’s total equity increased from ₹ 51,996.34 crore to ₹ 74,674.80 crore.

Accounting Quality and Regulatory Risk Assessment #

• Accounting Quality: BPCL’s accounting policies are generally in line with Ind AS, promoting transparency and comparability. The use of historical cost, with exceptions for fair value measurement, is standard practice. The implementation of “Project Anubhav” to enhance digitization of financial reporting and use of SAP provide enhanced internal controls. The restatement of previous financials to incorporate mergers indicates a commitment to accurate reporting.
• Regulatory Risk Assessment: BPCL is subject to inherent regulatory risks as a government-controlled entity in the oil and gas sector. The delay in achieving the required number of Independent Directors may have implied risk to non-compliance with SEBI’s Listing Regulations.