(EnergyAsia, September 30) — IndianOil Corp chairman S. Behuria provided the following update of the company’s activities at its recent 46th Annual General Meeting in Mumbai, India.
“The year 2004-05 proved to be a cataclysmic year for major oil importing nations like India. Growing demand, a turbulent supply market, lack of spare production capacity and continual turmoil in several oil-producing countries pushed up crude oil prices to record levels beyond US$70 per barrel.
“Many countries chose not to pass on the entire increase in product prices to customers, and instead chose to maintain demand growth through pricing mandates and subsidies. Many affected nations have now begun to acknowledge the reality of high prices of crude oil and are moving to adjust product prices accordingly to secure the future sustenance of their petroleum industry.
“Consumption of petroleum products in India continued to rise, to about 112 million tones (in FY2004), up from 107.7 million tonnes in 2003-04.
“The domestic retail prices of petrol, diesel, kerosene for public distribution system (PDS) and LPG for domestic use, which together constitute nearly 70% of the oil products sold in the country, did not move in tandem with international prices for the best part of the year. The heavy burden of price under-realisation on the sale of these four main products adversely impacted not only the bottom line but also the working capital needs of public sector oil marketing companies.
“Given this situation, these companies turned in a subdued performance for 2004-05. This was despite good refining margins and marginal revisions in retail prices of transportation fuels during the year. The upstream companies and the stand-alone refining companies, however, benefited to a large extent from the high crude oil prices and robust refining margins respectively. This left the public oil marketing companies, including IndianOil with no alternative but to seek government assistance.
“Despite such a turbulent business environment, IndianOil maintained its performance in all key areas of its operations during 2004-05. It became the first Indian corporate to breach the Rs1,500 billion mark in sales turnover, while at the same time grossing its first US$1 billion in revenues through initiatives in new businesses.
“IndiaOil also posted a major milestone in marketing of petroleum products with its product sales including exports crossing 50 million tonnes. IndianOil reached a new landmark when its countrywide network of gasoline and diesel retail stations expanded beyond 10,000. 2004-05 also marked IndianOil’s big-ticket entry into petrochemicals and upstream operations, besides breaking new ground in overseas ventures and marketing of natural gas.
“IndianOil maintained its position as India’s No.1 Company in the Fortune Global 500 listing this year too, with continuous improvement in ranking from 226 in the year 2002 to the current ranking of 170. It also moved up to become the 18th largest petroleum company in the world. For the second consecutive year, IndianOil was adjudged # 1 in petroleum trading among Asia’s national oil companies.
“IndianOil sold 50.13 million tonnes of oil products, including exports, as against 48.61 million tonnes the previous year, registering an increase of 3.1%. Domestic sales were up by 2.9% to 48.17 million tones while exports soared by almost 8% to 1.96 million tonnes.
“IndianOil’s gross refining margin rose by about a dollar per barrel to US$6.2 per barrel. Its seven refineries registered a crude oil throughput of 36.63 million tonnes with a capacity utilisation of 88.6%. The pipelines network was expanded to 7,730 kilometres and posted a combined throughput of 43.03 million tonnes during the year.
“IndianOil has begun chartering tankers on its own for import shipments, enabling it to achieve further reduction in freight costs besides streamlining its business from crude procurement to marketing of products.
“IndianOil’s sales turnover (inclusive of excise duty) for the year 2004-05 touched a new high of Rs 1,506,770 million, up by 15.72% as compared to Rs 1,302,030 million the previous year. (US$1=Rs46).
“However, after-tax profit fell 30.17% to Rs 48,910 million from Rs. 70,050 million the previous year. This was mainly on account of under-realisation incurred on sale of gasoline, diesel, kerosene and domestic LPG.
“The board has recommended a final dividend of 100% amounting to Rs 1,168,010 million for the year 2004-05. Earlier, IndianOil had paid an interim dividend of 45% amounting to Rs 525,610 million in 2004. With this, the total dividend for the year 2004-05 works out to Rs1,693,620 million, equivalent to 145%. IndianOil’s earnings per share (EPS) for the year 2004-05 stood at Rs. 41.88.