It gives me great pleasure to present to you the 59th Annual report for
the year 2010-11.
The Indian economy has recovered swiftly from the slowdown resulting
from the financial crisis of 2008-09. The GDP growth rate was 8.5% in
2010-11 compared to 8% in 2009-10. The growth, however, was accompanied
by persistently high inflation. inflation rate has remained above 8%
throughout the year.
Global oil prices, which had remained stable within the -85 per
barrel range for most part of 2010, started rising in the latter part
and reached 5 per barrel by March 2011. The rise was due to strong
growth in the global oil demand and the impact of turmoil in the
The consumption of petroleum products in India increased by 2.6% in
2010-11. A total of 143 MMT of petroleum products were consumed during
the year. Increasing prosperity and rising vehicle ownership boosted
the demand for transport fuels. Petrol and diesel consumption recorded
growth rates of 11% and 7% respectively. Diesel prices were largely
unchanged as inflation remained a major concern. Gas made further
inroads in the industrial segment replacing oil demand. Demand for
industrial fuels such as FO/LSHS and Bitumen declined.
India''s rising energy demand will increase demand for energy sources
including natural gas. Natural gas burns more cleanly than other fuels,
an important attribute in an era of rising concerns about greenhouse
gas emissions and its impact on climate.
The turnover of HPCL increased by 22% to Rs. 1,32,670 crores during the
year. Profit after tax increased to Rs. 1539 crores during 2010-11 from Rs.
1301 crores in 2009-10 after absorbing an under recovery of Rs. 1509
crores on the sales of sensitive petroleum products. Although
borrowings have increased, the interest cost has been brought down
through prudent treasury management. High cost debt has been retired
and substituted with low cost debt.
Our refineries achieved combined throughput of 14.75 MMT achieving
nearly 100% capacity utilization despite shutdown of key units for
revamp and turnaround activities. This year has seen completion of
significant projects and revamp of our refineries at Mumbai and Visakh
for handling additional throughput and improved flexibility in handling
different varieties of crude oil. Refining margins in both our refineries
were in the to per barrel range compared to .5 to per barrel
The sales for HPCL in 2010-11 reached 27 MMT, including exports. In the
domestic market we have grown by 5.5% recording a growth of about 3%
above Industry and achieved 25.5 MMT of sales. We have increased sales
of MS, HSD, LPG, FO and LDO. Naphtha sales were impacted by the
availability of Natural gas. We are focused on strengthening our
network in the rural markets.
We have continued to build on our pipeline capabilities. We have
achieved a throughput of about 13 million tons against a target
throughput of 10 million tons through our pipelines.
We have submitted bids for city gas distribution for 4 cities during
the year. We are also in discussions with State Government of West
Bengal to implement the CGD project in the city of Kolkata through a
Joint Venture company. As a step to establish presence in the growing
field of alternate energy, we have commissioned additional 25 MW
capacity in Wind Farm project taking the total capacity to 50 MW of
We have leveraged ICT tools and the platform provided by the ERP
extensively to bring in process efficiency, better control and
transparency during the year.
We have completed several important projects during the year.
We have commissioned a new Fluidized Catalytic Cracking Unit (FCCU-II)
of capacity 1.45 MMTPA at Mumbai Refinery and revamped the second FCCU
at Visakh Refinery from 0.6 to 1.0 MMTPA. These projects will help in
maximizing production of MS and LPG. The Single Point Mooring (SPM)
facilities at Visakh have been completed which will result freight
The Lube Oil Base Stock (LOBS) project at Mumbai Refinery has been
commissioned enhancing LOBS production capacity to 400 TMTPA. We have
also commissioned a new Grease & Specialty Product Plant at Silvassa
with a capacity of 4.7 TMTPA.
The mechanical completion of 250 Km. long Bathinda – Ramanmandi –
Bahadurgarh pipeline has been achieved during the year. We have
commissioned the World''s largest Flex Speed Carousal at Cherlapally LPG
plant and the largest exclusive fully automated Black Oil terminal in
the country at Visakhapatnam.
The Sugar Mills at Sugauli & Lauriya have been completed and
commissioned in March 2011. The construction of the Cogen and Ethanol
plants is in advanced stage and commissioning is expected during
The HMEL Refinery project is nearing completion and commissioning is
expected in the current financial year. This is our first Refining project
in the northern part of the country and will ease product availability
issues in the region.
We have a large pool of experienced and dedicated manpower whose hard
work has been instrumental in achieving our goals. I would like to
acknowledge their effort in all that we have achieved so far. We will
continue to provide a productive working environment and ensure that
our people continue to deliver the best performance.
HPCL has a great history for meeting the fuel and energy needs of our
country.We have a responsibility to cater to the increasing domestic
fuel demand. We are focused on making HPCL financially safe and secure
by planning for the future and balancing the business portfolio to
insulate the company from the impact of increasing crude oil prices.
To build value to the shareholders, we have identified five strategic
areas as our priority over the next few years, viz.
1. Improve Profitability & Build the upstream business.
2. Increase the Refining capacity to meet the marketing demand.
3. Achieve sustained Sales growth above industry.
4. Provide differentiated customer experience through strong
5. Aggressively pursue growth opportunities in Natural Gas & Alternate
Our customers, business associates and shareholders have always been a
source of strength and I thank them for their support. The Ministry of
Petroleum & Natural Gas has guided and supported us in all our efforts.
We look forward to their continued support in all our endeavors.
S. Roy Choudhury