Indian Oil - $IOCL.IN

What’s Indian Oil Business Model?

Indian Oil Corporation Limited explores for and refines crude oil, in addition to manufacturing petroleum & petroleum products. The Company’s products include lubricating oils, liquid petroleum gas, aviation turbine fuels, greases, wax, bitumen and asphalt. Indian Oil Corporation has retail outlets throughout India. The greatest majority shareholding in the Company is held by Indian Government.

What Indian Oil is doing in more details?

Indian Oil Corporation Limited (IndianOil) is the country’s largest integrated and diversified energy company. It accounts for the largest market share of India’s petroleum product consumption.

Of India’s more than 20 refineries, the company owns approximately 10, which processed approximately 80.55 million metric tons. The group also owns more than 15,000 kilometers of pipeline and operates a chain of gas stations across India.

In addition, IndianOil has a network of more than 32,060 retail outlets, and it also has exploration and production operations in India and around the world. Most of the company’s revenue is generated in India.

Where Indian Oil is Operating?

IndianOil sells petroleum products and petrochemicals, and operates other businesses (gas, explosives and cryogenics, wind and solar power generation, and oil and gas exploration).

Petroleum products account for nearly 95% of the company’s total revenues. Petrochemicals generate about 5% of the company’s revenue.

In addition to approximately 20 refineries and retail networks, IndianOil has about 120 bulk storage terminals and depots, about 120 aviation fuel stations and approximately 95 LPGs bottling plants.

The company also has about 1,060 CGN stations, about 12,725 LPG distributors and approximately 6,885 consumer pumps.

It sells bottled LPG under its Indane brand though a network of more than 12,725 distributors (more than 52% of the industry). In addition, Indian Oil also has extensive exploration and production and petrochemical operations.

Overall, high speed diesel contributes approximately 50% of the company’s total revenue, followed by motor spirit (more than 20%), and liquified petroleum gas (over 10%). Aviation turbine fuel, superior kerosene oil and other products and services account for the remaining.

Where is the geographical reach of Indian Oil?

Headquartered in New Delhi, the company has petroleum products and petrochemical operations across India and a presence in Sri Lanka, Mauritius, the UAE, Sweden, the US, and the Netherlands through subsidiaries.

It has oil and gas exploration and production activities in India, and in Gabon, Iran, Libya, Nigeria, and Venezuela. The company generates most of its revenue in India, while other countries account for the remaining.

What is Indian Oil’s Sales and Marketing Strategy?

IndianOil serves customers across a diverse array of industries that include refining, pipeline, transportation, petrochemicals and aviation sectors. All the retail outlets of the corporation have been automated.

The corporation released the highest new domestic LPG connections to more than two crore customers, out of which about 3.75 crore connections were released under Pradhan Mantri Ujjwala Yojana.

What is Indian Oil Financial Performance?

Note: Growth rates may differ after conversion to US Dollars.

The revenue from operations fell by about 9% during the year (from ?5,66,354 Crore during 2019-20 to ?5,14,890 Crore during 2020-21). This was mainly on account of a decrease in sales volume in the first half of the year due to the nationwide lockdown.

Average crude prices of the Indian Basket for 2020-21 registered a decline of 26%, from $60.47/bbl in the previous year to $44.84/bbl in the current year.

Net income for 2021 was ?29,715.6 crore, compared to the previous year’s net loss of ?3,694.1 crore.

The company’s cash at the end of 2021 was ?313.6 crore. Operating activities generated ?49,095.8 crore, while investing activities used ?22,154 crore, mainly for expenditure on construction work in progress. Financing activities used another ?27,163.8 crore, mainly for repayments of short-term borrowings.

What is Indian Oil Future Strategy?

IndianOil is stimulating efficient use of assets and funds for stable growth and financial reliability. It strives to generate maximum profit through optimum use of working capital by reducing idle or inefficient fixed assets and directing investments towards areas with potential for growth.

Its prudent capital allocation strategy is aligned to building a robust balance sheet. The company strives to realize its goals of sustainable growth by investing effectively across R&D, capital expenditures and shareholder returns.

The onset of the Covid-19 pandemic severely disrupted business in the first half of 2020-21. IndianOil adopted lean financial measures across operations to maintain liquidity with minimum stress on the balance sheet.

During the year, the company raised long-term fund of H 7,915.20 crore by issuing unsecured, listed NCDs in the domestic market, and H 2,227.54 crore through term loans from banks as well as H 437 crore through term loan from OIDB.

IndianOil resumed its various capex projects after the relaxation of lockdown in Q2 2020-21. These projects remain critical for addressing the country’s future energy demands, generating employment, boosting the economy and making India self-reliant (towards an ‘Aatmanirbhar Bharat’).

What is Indian Oil’s Background?

In 2011 Indian Oil officials announced that in order to meet the demands of India’s burgeoning population they planned to boost their company’s refining capacity from 55.6 million metric tons a year in 2012 to 123 million metric tons a year by 2021 by expanding and modernizing its plants. (In 2008 it gained ownership of its Assam-based Bongaigoan Refinery & Petrochemicals subsidiary, giving it a dominant position in Eastern India). The company has also been consolidating and streamlining its operations to achieve greater efficiencies in its refining and marketing businesses.

Boosting its petrochemical output, in 2010 the company opened India’s largest naphtha cracker plant at Indian Oil’s Panipat Complex in the state of Haryana. The plant produces ethylene and propylene.

India has been moving slowly but surely into a deregulated oil economy. The Indian government dismantled price controls on oil in 1998 and on consumer petroleum products in 2001,

nd is gradually phasing out subsidies paid to domestic oil companies, forcing oil companies, even government controlled ones, like Indian Oil, to succeed or fail in a free market environment.

The Indian government owns about 79% of Indian Oil.

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