Indian Oil Corporation Ltd:Annual Report 2023-24 Analysis

Indian Oil Corporation Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Indian Oil Corporation Ltd. (IOCL) was established on June 30, 1959, through the merger of Indian Refineries Limited and Indian Oil Company.

Headquarters Location and Global Presence:

The company’s headquarters are located in New Delhi, India. IOCL has a significant presence in the Indian subcontinent and also operates in select international markets, primarily through joint ventures and subsidiaries.

Company Vision and Mission:

• Vision: To be ‘The Energy of India’ and ‘A Globally Admired Company.’
• Mission: To provide energy access to all, responsibly and sustainably, and to create value for stakeholders.

Key Milestones in their Growth Journey:

• 1964: Commissioned its first refinery at Guwahati.
• 1965: Set up its first lube blending plant at Kolkata.
• 1972: Established its R&D Centre.
• 1995: Became a Fortune Global 500 company.
• 2004: Launched Indane Nanocut (LPG for industrial applications).
• 2019: Marked 60 years of serving the nation.

Stock Exchange Listing Details and Market Capitalization:

IOCL is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Market capitalization fluctuates based on market conditions and company performance. (Please check current financial data for updated figures.)

Recent Financial Performance Highlights:

(Please check IOCL’s latest annual reports and investor presentations for the most up-to-date financial information.)

Management Team and Leadership Structure:

IOCL is headed by a Chairman and Managing Director (CMD), supported by a board of directors comprising functional directors and government nominees. The leadership team consists of experienced professionals in various domains of the oil and gas industry.

Notable Awards or Recognitions:

IOCL has received numerous awards and recognitions for its performance, innovation, corporate social responsibility, and other achievements. (Refer to IOCL’s website for a list of recent awards.)

Products #

Complete Product Portfolio with Categories:

• Petroleum Fuels: Petrol (Gasoline), Diesel, Aviation Turbine Fuel (ATF), Kerosene.
• Liquefied Petroleum Gas (LPG): Indane (Domestic), Commercial LPG.
• Lubricants: Servo (Automotive, Industrial, Marine).
• Petrochemicals: Polymers (Polypropylene, Polyethylene), Aromatics (Benzene, Toluene).
• Bitumen: IndianOil Bitumen.
• Specialties: Solvents, Greases, Waxes.

Flagship or Signature Product Lines:

• Servo Lubricants: A widely recognized and established brand in the lubricants market.
• Indane LPG: The most prominent LPG brand in India.
• XtraPremium Petrol and XtraMile Diesel: Premium fuel variants.

Key Technological Innovations or Patents:

IOCL’s R&D Centre focuses on developing new technologies and processes in refining, petrochemicals, and alternative energy. This includes patents related to catalyst development, process optimization, and product formulations.

Manufacturing Facilities and Production Capacity:

IOCL operates several refineries across India, including:

• Guwahati Refinery
• Digboi Refinery
• Barauni Refinery
• Gujarat Refinery
• Haldia Refinery
• Mathura Refinery
• Panipat Refinery
• Paradip Refinery
• Bongaigaon Refinery

They have a combined refining capacity of over 80 million metric tonnes per annum (MMTPA), making them the largest refiner in India. They also have petrochemical complexes integrated with some refineries.

Quality Certifications and Standards:

IOCL’s products and operations adhere to stringent quality certifications and standards, including ISO 9001, ISO 14001, and OHSAS 18001.

Recent Product Launches or R&D Initiatives:

IOCL continues to invest in R&D to develop new and improved products and processes, including:

• Development of BS-VI compliant fuels.
• Research into alternative fuels like biofuels and hydrogen.
• Development of specialized lubricants for various applications.

Primary Customers #

Target Industries and Sectors:

• Automotive
• Aviation
• Industrial
• Agriculture
• Power
• Shipping
• Residential

Geographic Markets (Domestic vs. International):

Primarily focused on the domestic Indian market, but also present in select international markets through exports and joint ventures.

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

• Agricultural: Supply of diesel and lubricants for agricultural machinery.
• Industrial: Supply of fuels, lubricants, and petrochemicals for various industries.
• Residential: Supply of LPG for cooking and heating.
• Transportation: Supply of fuels for vehicles, aviation, and shipping.

Distribution Network and Sales Channels:

IOCL 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:

• India: Bharat Petroleum Corporation Ltd. (BPCL), Hindustan Petroleum Corporation Ltd. (HPCL), Reliance Industries Limited (RIL), Nayara Energy.
• Globally: Major multinational oil and gas companies.

Competitive Advantages and Disadvantages:

• Advantages: Largest market share in India, extensive refining capacity, vast distribution network, strong brand recognition, significant government support.
• Disadvantages: Dependence on crude oil imports, vulnerable to price fluctuations, regulatory constraints.

How they Differentiate from Competitors:

• Scale and reach of operations.
• Strong focus on customer service.
• Emphasis on R&D and innovation.

Future Outlook #

Expansion Plans or Growth Strategy:

IOCL is focusing on:

• Expanding refining capacity.
• Diversifying into petrochemicals and alternative energy sources.
• Strengthening its distribution network.
• Improving operational efficiency.

Upcoming Products or Innovations:

• Increased focus on biofuels and hydrogen.
• Development of advanced lubricants.
• New petrochemical products.

Sustainability Initiatives or ESG Commitments:

IOCL is committed to:

• Reducing its carbon footprint.
• Investing in renewable energy sources.
• Promoting energy efficiency.
• Implementing responsible environmental practices.

Industry Trends Affecting their Business:

• Growing demand for energy in India.
• Increasing adoption of electric vehicles.
• Fluctuations in crude oil prices.
• Growing environmental concerns.

Long-Term Vision and Strategic Goals:

IOCL aims to be a leading integrated energy company, providing sustainable and affordable energy solutions to meet India’s growing energy needs. They are focusing on diversification, innovation, and sustainability to achieve this vision.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics (Standalone) #

• Revenue from Operations decreased from ₹728,445 crore (FY2021-22) to ₹934,953 crore (FY2022-23) and then to ₹8,66,345 crore (FY2023-24), a decrease of 1 % over the previous year.
• Profit Before Tax (PBT) fluctuated significantly: ₹31,733 crore (FY2021-22), ₹9,698 crore (FY2022-23), and ₹52,344 crore (FY2023-24).
• Profit After Tax (PAT) showed significant variation: ₹24,184 crore (FY2021-22), ₹8,242 crore (FY2022-23) and ₹39,619 crore (FY2023-24).
• Earnings Per Share (EPS) mirrored the PAT trend: ₹17.56 (FY2021-22), ₹5.98 (FY2022-23), and ₹28.77 (FY2023-24).
• Debt-Equity Ratio improved from 0.84 (FY2022-23) to 0.66 (FY2023-24).
• Return on Average Net Worth improved from 7.08% (FY2022-2023) to 29.75%(FY 2023-2024)
• Return on Average Capital Employed also improved from 6.19% (FY2022-2023) to 20.17%(FY2023-2024).
• EBITDA margin improved from 3.05% to 8.56%
• Operating Profit margin improved from 1.11% to 6.34%
• Net Profit margin improved from 0.88% to 4.57%

Business Segment Performance (2023-24) #

Petroleum Products #

• Contributed the largest share of revenue: ₹8,03,127 crore (before inter-segment elimination).
• Segment results (before interest and taxes) were ₹55,177 crore.
• Sales volume: 92.311 MMT (domestic), and overall sales including exports are the highest ever.

Petrochemicals #

• Revenue: ₹26,187 crore.
• Segment results were negative at ₹(344.14) crore, reflecting challenges or investments in this area.
• Achieved record Naphtha processing and production of various products.

Other Businesses #

• Revenue: ₹37,031 crore.
• Segment results: ₹789.20 crore.
• Includes Gas, Oil & Gas Exploration, Explosives, and Cryogenics, as well as renewables.

Major Strategic Initiatives and Their Progress #

• Refinery Expansions: Barauni, Panipat, and Gujarat refineries expansions are scheduled for completion by 2025-26, and Guwahati Refinery from 1.0 MMTPA to 1.2 MMTPA was completed in Nov 2023.
• Petrochemical Integration: Significant investments are planned, with projects worth ₹30,000 crore under implementation and ₹90,000 crore under feasibility study.
• Pipelines Expansion: Added 2,180 km of pipeline length in 2023-24. Commissioned the longest LPG pipeline in the country (1,707 km).
• Natural Gas Business: Sales of natural gas increased significantly to 6.5 MMT with 49% increase in sales.
• Green Hydrogen: Rollout of hydrogen fuel cell buses and MoUs with the Indian Army and other entities.
• Biofuels: 31 CBG plants commissioned and over 1700 Letter of Intent (LoIs) under SATAT. ETHANOL 100 fuel launched.
• Electric Mobility: Commissioned 9,059 EV charging stations (as of March 31, 2024). Collaborations for battery technology.
• Sustainability: Top Indian company in Bloomberg NEF Global Energy Transition Score.

Risk Landscape Changes #

• Market Competitiveness Risk: Addressed through operational efficiency, innovation, and customer-centric approaches.
• Macroeconomic Volatility Risk: Mitigated by diversifying crude oil sources and process innovations.
• Currency Exchange Risk: Addressed through continuous monitoring, hedging, and cost control measures.
• Human Resource Risk: Managed by compliance with health and safety regulations, training, and employee development programs.
• Environmental Risk: Addressed through BS-VI compliance, sustainability initiatives, and a Net-Zero emissions target by 2046.
• Cybersecurity Risk: Mitigated by a defence-in-depth cyber security architecture and ISO 27001:2013 certification.

ESG Initiatives and Metrics #

Environmental #

• Achieved full BS-VI compliance for petrol and diesel.
• Net-Zero operational emissions target by 2046.
• Investments in green hydrogen, biofuels, renewables, and ecosystem restoration.
• Mathura Refinery uses treated wastewater, reducing freshwater intake by 50%.
• Gujarat Refinery uses treated wastewater, reducing freshwater intake by 25%.
• Water savings of about 54 MLD in the last five years.
• Biodiversity conservation projects (e.g., Project Cheetah, coral translocation).

Social #

• CSR initiatives in healthcare, sanitation, education, and community development.
• TB elimination programs, cancer care equipment provision, and support for visually impaired individuals.
• ‘Parivartan - Prison to Pride’ and ‘Nayi Disha - Smile for Juvenile’ programs.
• Sports sponsorships and scholarships, including the ‘IndianOil Shakti’ program for female athletes.

Governance #

• Whistleblower Policy and Code of Conduct for ethical behavior.
• Risk Management Committee (RMC) and Risk Management Compliance Board (RMCB) for risk oversight.

Management Outlook #

• Aspires to be a “One Trillion Dollar Giant by 2047,” aligning with India’s economic growth vision.
• Aims to fulfill 12.5% of India’s energy needs by 2050.
• Plans to increase renewable energy capacity to 31 GW by 2030.
• Targeting 50% green hydrogen consumption by 2030.
• Significant investments in petrochemical capacity expansion.
• Commitment to expanding the green energy portfolio and achieving Net-Zero operational emissions by 2046.
• Plans to consolidate green initiatives through the “Terra Clean Limited” subsidiary.
• Focusing on expanding the Cryogenics group.

Detailed Analysis #

Financial Analysis of Indian Oil Corporation Limited (IOCL) #

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

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

• Investments (Non-Current): Increased by 31.29% from ₹41,753.92 Crore to ₹55,162.04 Crore.
• Other Equity: Increased by 34.69% from ₹125,948.68 Crore to ₹169,644.71 Crore, primarily due to retained earnings from higher net profit.
• Borrowings (Non-Current): Decreased by 26.12% from ₹63,312.94 Crore to ₹46,792.90 Crore.
• Cash and Cash Equivalents: Increased by 25.13% from ₹996.35 crore to ₹1,246.59.
• Assets Held for Sale: Increased by 20.36%.

Working Capital Trends #

• Current Assets increased slightly.
• Current Liabilities increased and remain significantly higher than current assets, indicating a negative working capital, though there is an improvement because current assets grew slightly while current liabilities were reduced.

Debt Structure and Maturity Profile #

• Non-Current Borrowings: Decreased substantially (as noted above).
• Current Borrowings: Increased slightly.
• The details on the maturity of specific bond series and term loans are provided, indicating a mix of short-term and long-term debt.

Off-Balance Sheet Items #

• Contingent Liabilities: The Group has significant contingent liabilities as provided in Note-37.
• Guarantees: The Group provided guarantees amounting to a total of H 4762.47 Cr.
• Commitments: Capital commitments total H 61,201.75 crore.

Indian Oil Corporation Limited (IOCL) Financial Analysis: 2023-24 #

Revenue Breakdown by Segment (Standalone) #

• Petroleum Products: Revenue decreased by 8.6% from ₹879,223 crore (2022-23) to ₹803,127 crore (2023-24).
• Petrochemicals: Revenue increased by 17.7% from ₹22,259 crore (2022-23) to ₹26,187 crore (2023-24).
• Other Businesses: Revenue increased by 10.6% from ₹33,471 crore (2022-23) to ₹37,031 crore (2023-24).

Geographical Revenue (Consolidated) #

• India: Revenue decreased from ₹900,880.07 crore (2022-23) to ₹834,350.03 crore (2023-24).
• Outside India: Revenue decreased from ₹50,529.87 crore (2022-23) to ₹46,885.42 crore (2023-24).

Cost Structure Analysis (Standalone) #

• Cost of Materials Consumed: Decreased from ₹440,693.11 crore (2022-23) to ₹390,292.58 crore (2023-24).
• Excise Duty: Decreased from ₹95,480.46 crore (2022-23) to ₹91,996.79 crore (2023-24).
• Purchases of Stock-in-Trade: Decreased from ₹324,606.14 crore (2022-23) to ₹254,929.35 crore (2023-24).
• Employee Benefits Expense: Increased from ₹8,769.85 crore (2022-23) to ₹11,079.56 crore (2023-24).
• Other Expenses: Decreased from ₹49,603.91 crore (2022-23) to ₹46,528.58 crore (2023-24).

Margin Analysis (Standalone) #

• Gross Refining Margin (GRM): Decreased from $19.52 per barrel (2022-23) to $12.05 per barrel (2023-24). Normalised GRM decreased from $20.14/bbl to $11.44/bbl.
• Operating Profit Margin: Increased from 1.11% (2022-23) to 6.34% (2023-24).
• Net Profit Margin: Increased from 0.88% (2022-23) to 4.57% (2023-24).
• EBITDA Margin: Increased from 3.05% to 8.56%.

EPS Analysis (Standalone) #

• Basic EPS: Increased from ₹5.98 (2022-23) to ₹28.77 (2023-24).
• Diluted EPS: Increased from ₹5.98 (2022-23) to ₹28.77 (2023-24).

Financial Analysis of Indian Oil Corporation Limited #

Cash Flow Analysis (J in Crore) #

Operating Cash Flow (OCF) #

• 2023-24: Increased to 68,096.60 from 20,985.35 in 2022-23, driven by Profit Before Tax increase.
• Primary positive adjustments to reconcile Profit Before Tax to net cash generated from operating activities include Depreciation & Amortisation (14,509.60) and Finance Cost (7,327.79). Major negative adjustments were for Dividend Income and other non-cash items.

Investing Cash Flow (ICF) #

• 2023-24: Net outflow of (29,701.62) compared to (25,285.63) in 2022-23.
• Major outflows were for Purchase of Property, Plant & Equipment and Intangible Assets (4,284.68) and capital work-in-progress expenditure (30,924.39).

Financing Cash Flow (FCF) #

• 2023-24: Net outflow of (38,294.02) compared to inflow of 3,953.69 in 2022-23.
• Key outflows were Repayments of Long-Term Borrowings (17,286.37), Interest paid (7,388.58), and Dividends paid (11,021.81).

Working Capital Management Efficiency #

• Trade Receivables Turnover Ratio: Improved to 60.60 in 2023-24 from 54.43 in 2022-23.
• Inventory Turnover Ratio: Decreased to 7.62 in 2023-24 from 8.48 in 2022-23.
• Trade Payables Turnover Ratio: Decreased to 13.81 in 2023-2024 from 17.94 in 2022-23.

Capex Analysis #

• Refineries and Petrochemicals, including Pipeline projects constituted a major component of Capex.

Dividend and Share Buyback #

• Dividend Payout Ratio: 42% for 2023-24, below the 50% for 2022-23.
• Total Payout Ratio: 42%.
• Dividends: Interim dividend of H 6,886 crore paid during 2023-24. A final dividend of H 4,132 crore was paid.
• Bonus Issue: No bonus shares were issued during 2023-24.

Debt Service Coverage #

• Debt Service Coverage Ratio: Improved to 2.17 in 2023-24 from 1.30 in 2022-23.
• Interest Service Coverage Ratio: Improved to 9.08 times from 3.39 times.

Liquidity Position #

• Current Ratio: 0.69 as of March 31, 2024, broadly consistent with 0.74 as on March 31, 2023.
• Cash and Cash Equivalents at the end of the 2023-2024 period are 464.28 Cr, increased from 363.32 Cr.

Strategic and Management Analysis of Indian Oil Corporation Limited (IOCL) #

Long-Term Strategic Goals and Progress #

• Refining: IOCL aims to increase refining capacity to 87.9 MMTPA by 2025-26. Expansions at Barauni, Panipat, and Gujarat refineries are progressing.
• Petrochemicals: IOCL aims to increase its Petrochemical Intensity Index to 15% by 2030. Ongoing projects and planned expansions will provide niche petrochemical offerings.
• Natural Gas: IOCL aims for a threefold sales increase by the end of the decade. Infrastructure capacity is planned to be enhanced to meet this goal.
• Alternative Energy: The Company aims to have 31 GW of renewable energy capacity by 2030.
• Net Zero: IOCL is targeting Net-Zero operational emissions by 2046.
• Overall Revenue Target: Indian Oil aspires to be a One Trillion Dollar company by 2047.

Competitive Advantages and Market Positioning #

• Refining: IOCL is India’s largest refiner, with a current capacity of 70.25 MMTPA.
• Pipelines: IOCL operates one of the world’s largest oil pipeline networks.
• Petrochemicals: IOCL is the second-largest petrochemicals producer in India with a 3.1MMT petrochemical sales for 2023-24.
• Marketing: IOCL has a dominant market presence with 61,000+ customer touchpoints.
• Natural Gas: IOCL is the second-largest player in India’s natural gas market, with a 13% market share in 2023-24.
• Exploration and Production: IOCL holds participation in 18 domestic and 11 overseas assets.
• Alternative energy and other businesses: IOCL had an install capacity of 247 MW for the year 2023-2024

Innovation Initiatives and R&D Effectiveness #

• The company has a team size of 454 for R&D and spent J 946 crore on expenditure in the segment.
• Specialized Fuels: IOCL is the first Indian company to introduce FIM Category 2 Race fuel and is developing specialized fuel for Formula 1 cars.
• Reference Fuels: IOCL launched Reference Diesel and Gasoline fuel, achieving import substitution.
• Green Initiatives: IOCL is promoting ‘CYCLOPLAST’ (recycled plastics) and ‘Unbottled’ (garments from recycled PET).
• Hydrogen Mobility: IOCL is pioneering hydrogen fuel cell buses and hydrogen transportation infrastructure.
• Biofuels: IOCL leads with India’s first 2G and the world’s first 3G ethanol plants, and is establishing India’s first commercial-scale Sustainable Aviation Fuel (SAF) plant.
• R&D spend was J946 crore.
• The R&D division is described as the “cornerstone” for supporting the “Atmanirbhar Bharat” (self-reliant India) initiatives.

M&A Strategy and Execution #

• Wholly owned subsidiaries: The Company established ‘Terra Clean Limited’, for low carbon, and ‘IOC Global Capital Management IFSC Limited’ for financial purposes.
• Joint Venture: The Company entered into a binding term sheet with Panasonic Energy Company, Japan, to explore opportunities in the manufacture of lithium-ion batteries.
• Acquisition: The Company acquired Mercator Petroleum Limited(MPL).

Management’s Track Record in Execution #

• Financial Performance: IOCL achieved its highest-ever profit in 2023-24 ( H 39,619 Crore), a nearly five-fold increase from the previous year.
• Operational Performance: Record sales volume, refining throughput, and pipeline throughput were achieved.
• CAPEX Utilization: IOCL achieved 139% of its budgeted CAPEX target.
• Project Commissioning: Key projects were successfully commissioned, including refinery expansions and new units.
• Market Share: The Company has maintained market share in its category by commissioning over 1260 fuel stations.

Capital Allocation Strategy #

• 2023-2024: CAPEX was J42,236 crore, allocated to the Company’s projects.
• Refining: Investments are focused on expansions and upgrades.
• Petrochemicals: There is increased investments.
• Pipelines: Extensive network expansion is planned.
• Alternative Energy: Investments were made in renewables and greening efforts with J409.50 crores.

Organizational Changes and Their Impact #

• New Subsidiary: ‘Terra Clean Limited’ was established to consolidate green initiatives, aiming for optimized resource allocation and enhanced innovation.
• Core Values: Added ‘Nation-First’ to the existing core values, reflecting a broader commitment to national goals.
• GIFT City Operations: IOC Global Capital Management IFSC Limited was established, aiming for financial benefits and a stronger global position.

ESG Framework: Indian Oil Corporation Analysis #

Environmental Metrics and Targets #

• IndianOil aims for Net-Zero operational emissions (Scope 1 & 2) by 2046, requiring an estimated budget of ₹2.5 Lakh Crore.
• Refineries achieved their highest-ever capacity utilization of 104.5% in 2023-24 while sustaining Specific Energy Consumption (MBN) at 68.7.
• Refineries and the Panipat Naphtha Cracker (PNC) implemented 187 energy-saving schemes, reducing CO2 emissions by approximately 1.15 MMT.
• The Company targets to install 31 GW of renewable energy capacity by 2030.
• Achieved Water saving of about 54 MLD during the past five years.
• The Company is committed to minimizing water footprint, Mathura Refinery reduced freshwater intake by 50% using a sewage treatment plant.
• Gujarat Refinery reduced freshwater intake by 25% using treated wastewater.
• Renewable energy capacity stands at 247 MW (168 MW wind, 79 MW solar PV).
• 19,62 Trillion BTU Energy consumed, 149.59 Billion liters Water consumed, 4.5 MMT CO2 emission Avoided/offset.
• The Company had a carbon footprint of ~22.76 MMTCO2e during the year.

Social Responsibility Programs #

• IndianOil spent ₹457.71 Crore on CSR projects in 2023-24, exceeding the budgeted ₹422.42 Crore.
• Approximately 600 CSR projects were conducted annually, prioritizing marginalized sections of society near company installations.
• CSR initiatives have reached 117.66 Lakh beneficiaries.
• ₹290.03 Crore (63.36% of total CSR expenditure) was allocated to ‘Health and Nutrition’.
• ₹47.26 Crore was spent in 40 aspirational districts.
• Supported the Intensive TB Elimination Programme in multiple states, testing nearly one lakh individuals and identifying over 14,000 positive cases.
• Provided cancer care equipment to hospitals, expected to impact around one lakh patients annually.
• ‘Parivartan - Prison to Pride’ and ‘Nayi Disha - Smile for Juvenile’ programs impacted over 6,300 inmates.
• ‘IndianOil Shakti’ program, supported by an MoU with the National Sports Development Fund (NSDF) is empowering young female athletes.
• TB Mukt Bharat is being accelerated by ensuring Diagonistic Machines in Uttarakhand.

Governance Structure and Effectiveness #

• The Board of Directors supervises and strengthens the risk management framework.
• The Risk Management Committee (RMC) reviews and approves risk management policies.
• A Risk Management Compliance Board (RMCB) of senior executives evaluates reported risks.
• The Whistleblower Policy is a core component of the Company’s governance, enabling misconduct reporting and employee protection.
• A Code of Conduct (CoC) for Board Members & Senior Management Personnel is in place.
• There were 15 meetings of the Board of Directors in FY 2023-2024.

Sustainability Investments and ROI #

• IndianOil achieved a cumulative capital expenditure (CAPEX) of ₹42,236 Crore in 2023-24, exceeding the budgeted target by over 139%.
• Invested US$ 71.41 Million in Natural Gas with a production of 1.59 MM Tonnes of Natural Gas
• Plans to establish 1 GW of renewable energy capacity with an investment of over ₹5,000 Crore.
• The Company invested H 409.50 Crore on renewables and greening efforts.
• The Company is planning to invest over H 1,20,000 crore by 2030 in petrochemical sector.
• The Company aims to achieve a Petrochemical Intensity Index of 15% by 2030.

ESG Ratings and Peer Comparison #

• IndianOil is recognized as the top Indian oil and gas corporate in the Bloomberg NEF Global Energy Transition Score.
• The company tops the S&P Dow Jones Sustainability Indices in the oil and gas sector.
• IndianOil is placed third in the oil & gas sector in Brand Finance listing.

Regulatory Compliance and Future Preparations #

• The Company secured ’excellent’ ratings for the MoU parameters of the Ministry of Petroleum and Natural Gas (MoP&NG) for the past two years.
• Achieved full BS-VI compliance in petrol and diesel.
• The Company is future-proofing natural gas pipelines for hydrogen transportation, with a pilot study for up to 10% hydrogen blend planned in 2025.
• All IndianOil refineries are certified under ISO 14064 and ISO 14001 standards.

IndianOil’s Forward Outlook: Strategic Vision and Financial Analysis #

Management Guidance and Assumptions #

• Overall: Aims to become the nation’s primary energy provider, targeting 12.5% of India’s energy needs by 2050. Core values include ‘Nation-First’. Strategic vision includes achieving operational Net-Zero emissions by 2046.
• Refineries: Assumes continued growth in India’s refining capacity, projecting an increase from 256.8 MMTPA to 450 MMTPA. Plans to meet rising demand by augmenting both conventional and non-conventional energy.
• Petrochemical: Anticipates India’s rising demand for petrochemicals to continue.
• Natural Gas: Envisions playing a bigger role in India’s gas market and aims for sales to grow three-fold by the end of the decade.
• Alternative Energy: Assumes RE will be a major driver for de-carbonizing India’s energy mix, with plans to enhance the renewable capacity to 31 GW by 2030.

Market Growth Forecasts #

• Overall: India’s oil demand is projected to rise from 5.4 million barrels per day (bpd) in 2023 to 9.3 million bpd by 2040.
• Renewable Energy: The country is set to add 50 GW of renewable energy capacity annually, with a goal to achieve 500 GW of installed renewable capacity by 2030.
• Petrochemicals: India’s petrochemical market is experiencing a burgeoning opportunity.
• EV Market: India’s EV Market share projected to reach 30% by 2030.
• Hydrogen: Significant strides in green hydrogen, aiming for 50% of hydrogen consumption to be green by 2030.
• Natural Gas: The Company’s market share in India’s Natural Gas market has risen to 13%, up from 10% in the previous year.

Planned Strategic Initiatives #

• Overall: Transitioning towards future fuels and aims to be a trailblazer for a greener, prosperous India. Plans to consolidate its green initiative under a single umbrella by setting up a wholly owned subsidiary (WoS), ‘Terra Clean Limited’.
• Refineries: Expansion of Barauni, Panipat, and Gujarat Refineries is scheduled for completion by 2025-26. RLNG infrastructure at Barauni and Paradip Refineries have been commissioned.
• Pipelines: Construction of the world’s longest LPG pipeline (Kandla-Gorakhpur) is set to be commissioned in phases during 2024-25. A 50 km Siliguri-Jhapa Pipeline MoU was signed between India and Nepal. The Company plans to establish a central CGD monitoring center.
• Petrochemicals: Commissioning of the Butyl Acrylate plant at Gujarat Refinery is scheduled for 2024-25. Polypropylene units at Barauni and Gujarat Refineries are to be commissioned in 2025-26. The first phase of the Panipat Naphtha Cracker expansion, including the PX-PTA Revamp Project, and a new Ethylene Glycol plant in Paradip, were commissioned. Plans to scale up imports of petrochemical grades not currently produced by IndianOil.
• Marketing: Initiatives include Ujjwala 2.0 extension. Introduction of in-house expertise in Advanced Data Analytics.
• Alternative Energy: Setting up of 30 CBG plants nationwide is planned for this year. Strategic agreement with Panasonic Energy Company, Japan, to explore opportunities for advanced cell manufacturing of Lithium-ion batteries.
• Hydrogen Mobility: Plan to deploy four hydrogen fuel cell buses in Gujarat. A comprehensive Hydrogen Readiness Assessment in collaboration with SNAM, Italy on the Dadri-Panipat Pipeline (DPPL)
• Biofuels: Launch of a commercial CBG (Compressed Bio Gas) brand, ‘IndiGreen’. The company has established two CBG plants at Gorakhpur and Hingonia.
• Exploration & Production: The company aims to raise its upstream integration ratio primarily through investments in domestic assets.

Capital Expenditure Plans #

• Overall: Cumulative capital expenditure of ₹ 42,236 crore in 2023-24, exceeding the target by over 139%. Significant capital investments are planned for 2024-25 in both brownfield and greenfield expansions. Petrochemical integration is a key focus area.
• Alternative Energy: Plans to establish 1 GW of renewable energy capacity with an investment of over ₹ 5,000 crore.
• Petrochemicals: An additional investment of ₹ 1,20,000 crore in the petrochemical sector, to increase the Petrochemical Intensity Index from 6.1% to 15% by 2030. Projects worth ₹ 30,000 crore are under various stages of implementation and ₹ 90,000 crore are under feasibility study.

Efficiency Improvement Targets #

• Refineries: Refineries sustained Specific Energy Consumption (MBN) at 68.7. A target of Net-Zero operational emissions by 2046, in line with India’s 2070 commitment, is set. The goal is to reduce freshwater consumption, with targets such as utilizing 40 MLD of treated wastewater at Gujarat Refinery.
• Pipelines: The plan is to carry out a comprehensive Hydrogen Readiness Assessment for up to 10% hydrogen blend scheduled to take place in 2025.
• Water Management: Aim to maximize the use of treated wastewater and minimize freshwater usage, with the Mathura Refinery reducing freshwater consumption by 50% and the Gujarat Refinery by 25%.
• E-Mobility: Commissioned 10,028 EV charging stations, Battery swapping services are available at 99 fuel stations. Plans to expand this avenue for heavy-duty vehicle applications.
• Biofuels: Achieved over a 15% ethanol mix in petrol and plan to set up 30 CBG plants nationwide this year.

Potential Challenges and Opportunities #

• Challenges:

  • Market volatility and macroeconomic risks, including global crude oil price fluctuations.
  • Currency exchange rate fluctuations affecting import/export costs and foreign currency borrowings.
  • Cybersecurity risks.
  • Environmental risks due to large-scale operations.
  • Attracting and retaining a reliable talent pool.

• Opportunities:

  • India’s rising energy demand presents substantial growth potential.
  • First-mover advantage in green energy transition technologies.
  • Expansion of renewable energy capacity.
  • Growth in hydrogen mobility and transportation.
  • Development of a comprehensive ecosystem for battery technology.
  • Increase in petrochemical capacity to cater to the increasing needs of the country.

Scenario Analysis and Sensitivity #

• Crude Oil Price Volatility: Sensitivity analysis indicates that fluctuations in global crude oil prices significantly impact the company’s financial stability.
• Refining Margins: Show greater volatility due to high inventory holding.
• Currency Risk: Continuous monitoring and hedging activities are employed to mitigate exchange and interest rate risks.
• Environmental Risk: Emission controls and waste management, coupled with achieving Net-Zero emissions, remain a focus.
• Technological Risk: Continuous investment in R&D to leverage new technologies