Dear Shareholders,
It gives me immense pleasure to present to you our
inaugural integrated annual report on your Company's performance for the year 2023-24.
This year marks a proud and momentous occasion as we celebrate your Company's Golden
Jubilee.
It is a matter of pride that your Company achieved its best-ever
financial & physical performance, consistently creating value for its shareholders in
its 50th anniversary year. On physical performance, the highest ever market
sales of 46.8 MMT were achieved in 2023-24. I am delighted to share that your Company has
achieved the highest-ever consolidated Profit After Tax (PAT) of J 16,015 Crore and a
standalone PAT of J 14,694 Crore, reflecting robust financial performance. Towards value
creation for the shareholders, the Board of Directors has recommended the issuance of
bonus shares in the ratio of 1:2 and a final dividend of J 16.50 per equity share for the
year 2023-24.
This outstanding performance by HPCL exemplifies the Company's agility
and strategic acumen in navigating the constantly evolving energy landscape. It underlines
HPCL's sustained growth trajectory and highlights the Company's commitment to excellence
and innovation, even amid dynamic market conditions. I wish to thank all our shareholders
for their continued trust, employees and business partners for their commitment and
resilience and stakeholders for their unwavering support in making HPCL reach this
position in its Golden Jubilee year. To celebrate this remarkable achievement, your
organisation is embracing the theme of ‘Panchatattvon Ka Maharatna' in all our
endeavours and initiatives. The objective is to enhance stakeholder welfare while driving
sustainable growth and creating lasting value for all.
The excellent performance of 2023-24 was wide-ranging, encompassing
stellar physical and financial performance across all functions. On the marketing front,
your Company has continued to deliver superior performance backed by a wide array of
customer-centric initiatives and a strong supply chain network. Market sales peaked at
46.8 MMT during the year, with a growth rate of 7.8% over historical levels. HPCL
witnessed the highest- ever sales volume in major products, with petrol increasing by 6%,
diesel by 4%, LPG by 5.5% and aviation turbine fuel (ATF) by 27% during the year. During
the year, the retail business recorded overall sales of 28.8 MMT and continued to bolster
growth by improving accessibility and customer convenience. HP Gas', your Company's LPG
brand, remains as one of the most preferred brand among domestic and non-domestic LPG
customers. The LPG business line recorded sales of 8.6 MMT during the year. In addition to
this, your Company maintained its dominance in the lubricant business, exporting
lubricants to 13 countries during the year. Similarly, the I&C business line recorded
an overall sales volume of 5.4 MMT by maximising volumes in three focus products- diesel,
furnace oil and bitumen.
To meet the country's growing demand for petroleum products, your
Company maximised crude processing in both Visakh and Mumbai refineries. During the year,
your Company achieved the highest-ever combined refining throughput of 22.3 MMT, with a
capacity utilisation of 103%. The robust refinery reliability and standardised operating
processes contributed to the production of the highest-ever volumes of MS (Motor Spirit),
HSD (High Speed Diesel), LPG and LOBS during the year. The refineries embraced opportunity
crudes and exhibited adaptability in processing new grades of crudes, which helped in
enhancing performance. A combined Gross Refining Margin (GRM) of US$ 9.08/bbl has been
recorded during the year. In a noteworthy development, the Visakh Refinery Modernisation
Project (VRMP) was dedicated to the nation by the Hon'ble Prime Minister of India in March
2024. With a cost of over H 26,000 Crore, VRMP is the biggest investment in the oil sector
on the East Coast and stands as a testament to HPCL's commitment to enhancing product
availability and contributing significantly to the region's energy security.
Your Company continues to place strong emphasis on the operational
efficiency of marketing operations and has recorded significant gains in overall
throughput performance and productivity across the network of depots and petroleum product
pipelines. In 2023-24, your Company achieved the highest-ever throughput of 59.4 MMT in
the supply & distribution of petroleum products. With efficient product placement
planning and execution, pipeline operations achieved the highest-ever pipeline throughput
of 25.8 MMT. Energy efficiency and cost optimisation remain the key focal points in
pipeline operations. On the back of various cost optimization initiatives implemented
during the year, HPCL's pipeline performance on the Solomon Global Benchmarking of
Manageable Non-Volume Expenditure (MNVE) ranked in the top 6th percentile
worldwide. Major locations have implemented ISO certifications for energy management,
occupational health & safety, environmental management, and quality management to
ensure standardised processes and quality products.
HPCL's infrastructure remains its key strength in delivering products
efficiently and at competitive prices to customers. Your Company has made significant
strides in strengthening its refining & marketing infrastructure by investing H14,342
Inauguration of VRMP HGU & NIU by Secretary, MoP&NG Crore
during the year, including equity investments in its joint venture companies (JVCs) and
subsidiaries. HPCL commissioned two LPG plants, each with a capacity of 120 TMTPA, at Abu
Road (Rajasthan) and Varanasi (Uttar Pradesh). During the year, HPCL also commissioned a
new LDO rake unloading facility at Mangalore (Karnataka) and a black oil rake unloading
facility at Kandla (Gujarat). The commissioning of new Aviation Service Facilities (ASF)
at Maharishi Valmiki International Airport, Ayodhya (Uttar Pradesh), further strengthened
the aviation fuel network.
Your Company continuously enhances its customer touchpoint
infrastructure to broaden its reach nationwide. HPCL propelled its retail footprint by
commissioning 836 new retail outlets, bringing the total to 22,022 outlets and positioning
the Company as the nation's second-largest retail network owner. HPCL commissioned 66 new
LPG distributorships, bringing the total to 6,349 as of March 2024. Your Company has
enrolled over 28 lakh new LPG customers during the year, enhancing customer reach and
thereby taking the total LPG customer base to over 9.6 Crore. Your Company is making
significant strides in line with the Government of India's vision to enhance the share of
natural gas in the country's energy mix from 6% to 15% by 2030.
HPCL is participating in the entire value chain of the natural gas
business by constructing a 5 MMTPA LNG Regasification Terminal at Chhara Port in Gujarat,
through its 100% subsidiary. The project is scheduled for commissioning in 2024-25.
Additionally, HPCL and its JV companies are expanding City Gas Distribution Networks
across 25 Geographical Areas (GAs) in 14 states. The expansion has facilitated the
commissioning of 682 CNG stations and approximately
6.9 lakh PNG connections in the GAs allocated to HPCL and its JV
companies as of 31st March, 2024. Additionally, in order to expand the natural
gas footprint, your Company commissioned its first LNG dispensing unit at Oran, Gujarat
during the year.
Your Company is actively pursuing large-scale investments to build
petrochemical manufacturing capacities through joint ventures and expanding its
petrochemical portfolio. India's first integrated Grassroot Refinery cum
Petrochemical complex is being set up by HPCL Rajasthan Refinery Limited (HRRL), a joint
venture Company between HPCL and the Government of Rajasthan, at Pachpadra in Balotra
district of Rajasthan. The Refinery cum Petrochemical Complex has the Petrochemical
Intensity Index of 26%, which is the highest in India. The project is in the advanced
stage of completion. Leveraging 'HP DURAPOL' brand, your Company recorded sales of
45.6 TMT of polymers during the year. During the year, your Company established a separate
Strategic Business Unit (SBU) of Petrochemicals to ensure focused business strategies in
expanding the petrochemical portfolio.
HPCL is aligned with the Government of India's promotion of the
usage of biofuels in the transportation sector, which contributes to energy security,
environmental sustainability and social benefits. During the year, your Company achieved
ethanol blending of 12% by blending 156 Crore litres of ethanol in MS. HPCL's first
Compressed Biogas (CBG) plant
Inauguration of bio-mass based CBG Plant by Hon'ble Chief Minister
of Uttar Pradesh at Budaun, Uttar Pradesh
in Budaun, (Uttar Pradesh), has stabilized operations and commenced its
commercial sale. During the year, a CBG plant of 100 tonnes per day (TPD) of cow dung
processing capacity was also commissioned at Pathmeda, (Rajasthan) under the CSR scheme.
The 2G ethanol plant being set up in Bathinda, Punjab, is nearing completion, showcasing
the organisation's commitment to sustainable fuels. HPCL is actively participating in
the SATAT (Sustainable Alternative Towards Affordable Transportation) initiatives to
promote CBG. Five CBG Plants were commissioned during the year, bringing the total to nine
plants with a total capacity of 54.65 TPD as of 31st March, 2024.
Embracing renewable energy is crucial for India's sustainable and
inclusive growth. It addresses multiple challenges, from energy security and economic
development to environmental sustainability and social equity. Your Company is actively
participating in this sector and exploring new opportunities in collaboration with
technology start-ups, OEMs and others. HPCL's renewable energy portfolio has reached
a total capacity of 208 MW. A total of 17,618 HPCL retail outlets have been solarized.
Initiatives such as battery swapping and energy storage solutions are being pursued to
create value and support the transition to cleaner energy alternatives. Towards
sustainable mobility, your Company added 1,773 Electric vehicle (EV) charging facilities,
including battery swapping stations, bringing the total to 3,603 retail outlets with EV
charging facilities.
Your Company incorporated a wholly-owned subsidiary named 'HPCL
Renewable & Green Energy Ltd. (HPRGE)' in January 2024 to enhance its focus on
sustainability, leverage market opportunities and manage risks more effectively. The
objective is to expand the footprint in green energy businesses, including biofuels,
renewables, green hydrogen, carbon offsets, green mobility and alternative energy
solutions. I am pleased to announce that HPRGE has begun supplying renewable energy from
its newly commissioned 5 MW solar power project in Jhansi (Uttar Pradesh).
The 6 MW solar project at Panipat (Haryana) has been mechanically
completed and supplies are expected to commence shortly.
Commencement of 5 Megawatt Solar Power Plant Project at Jhansi
Integrating technology into business and fostering innovation will
continue to be a key focus for your Company, with the goal of streamlining operations,
achieving cost competence, meeting customer expectations and creating new opportunities
for growth and expansion. HPCL is harnessing advanced technologies such as Artificial
Intelligence (AI), Internet of Things (IoT), Robotics, generative AI, Natural Language
Processing (NLP) and other innovative digital solutions to integrate technology in every
aspect of business. The completion of the project to modernise the existing ERP system is
a significant step towards achieving greater business flexibility, digital agility and
improved efficiencies. The 'HP Green R&D Centre' plays a critical role in leveraging
innovation in conceptualizing, developing and commercialising new products and
technologies in existing and emerging business areas. HPCL received 51 patents during the
year, bringing its total patent granted count to 210 as of March 2024.
To meet the country's growing energy demand, HPCL has undertaken a
number of projects to expand its infrastructure. In addition to establishing a grassroots
refinery and petrochemical complex through our joint venture Company, HPCL Rajasthan
Refinery Ltd, several other projects are underway to enhance our distribution network. The
major projects include the Bathinda- Sangrur product pipeline, the Haldia-Panagarh LPG
pipeline, the revamping of Raipur and Vashi POL terminals, the setting up of the CGD
network in multiple Geographical Areas, establishing new LPG & POL depots at
Kamardanga (Assam) and the 80TMT LPG Cavern at Mangalore (Karnataka).
Your Company is proactively integrating ESG factors into future
strategies and operations to gain a competitive edge, attract investors, build resilient
business models and contribute to a sustainable global economy. In this direction, your
Company has developed a validated roadmap for achieving net zero in Scope 1 and 2
emissions by 2040. The roadmap is being implemented with the formation of a dedicated
'Energy Transition Cell.'
Your Company fully recognises the critical importance of the
environment, sustainability and safe practices in all facets of business. HPCL actively
participates in 'Mission LiFE,' driving individual behaviour change for global climate
action and aligning with the nation's sustainable development goals. Your Company has
taken up various environmental activities such as increasing the green belt, rainwater
harvesting, enhancing biodiversity, as part of the theme 'Panchatattvon Ka Maharatna'
which focuses on the five elements - earth, water, fire, air and ether.
HPCL has long upheld the belief that business objectives can align
harmoniously with social responsibilities and inclusive growth. Your Company's Corporate
Social responsibility (CSR) initiatives reflect this ethos, encompassing activities in
various focus areas. HPCL has committed to making a meaningful difference in society by
spending H 111.9 Crore on CSR activities during 2023-24. Through these initiatives, HPCL
aims to contribute to the well-being and development of the underprivileged while
fostering inclusivity.
The superior performance of your Company is driven by its dedicated
workforce of over 8,100 competent employees committed to achieving excellence. Your
Company upholds the principle of 'employee enablement,' empowering and equipping employees
with the necessary resources, tools, support and environment to perform their roles
effectively and efficiently. The objective is to allow the employees to unlock their full
potential, boost morale, improve job satisfaction and ultimately drive better business
outcomes to have a competitive edge in the market. The organisation has a culture of
continuous upskilling, providing resources for both technical and soft skill development.
By fostering a learning-centric environment, your Company empowers the
workforce to adapt to industry changes and contribute to the organisation's growth. Your
Company leverages technology to offer accessible and engaging learning materials that
cater to diverse learning styles. By incorporating DEI (Diversity, Equity and Inclusion)
principles, policies and practices into the organisational culture, your Company continues
to create a more inclusive, innovative and engaged workforce.
Succession planning and leadership development form the bedrock of your
Company's organisational resilience. Identifying key talents within your Company,
developing a leadership pipeline and implementing mentorship programs that facilitate
knowledge transfer from seasoned leaders to emerging talents were some of the key
initiatives. Institutional mechanisms are prevalent to regularly assess the skills and
competencies required for future leadership roles and align with evolving industry trends.
Your Company regularly conducts targeted training programs to equip potential leaders with
the necessary skills for their anticipated roles. The combination of well-executed
succession planning and leadership development continues to be a powerful driver that will
make your Company more dynamic, resilient and better equipped to navigate the challenges
of a diverse and rapidly changing world.
The global economic outlook for 2024 is moderate, with significant
disparities among regions becoming more pronounced. Geopolitical risks remain a major
concern, particularly with conflicts affecting key fossil fuel-producing areas. Despite
these global challenges, we expect the Indian economy to grow by 7.2% in real terms in
2024-25, thereby maintaining its position as the fastest-growing major economy in the
world. The growth outlook remains buoyant, given the government's sustained focus on
capital expenditure while maintaining fiscal consolidation. Strong corporate balance
sheets, rising capacity utilisation, double-digit credit growth, a healthy financial
sector and ongoing disinflation supports the growth outlook. However, lingering
geopolitical tensions, geo-economic fragmentation and adverse climate shocks impart
downside risks to the outlook.
With a population of about 1.4 billion and a fast-growing economy,
India has seen its energy demand increase rapidly as the country continues to urbanise and
the manufacturing sector develops. Significant investments and infrastructure development
are expected to meet the growing energy demand in the country. The growing demand is met
through various energy sources, including oil. Given that oil accounts for nearly
one-third of the country's energy demand, India is poised to become the global leader in
oil demand growth this decade.
India is set to accelerate the adoption of cleaner and more efficient
energy solutions with its ambitious goal of achieving net-zero emissions by 2070. Clean
electrification, improvements in efficiency and a switch to lower and zero-carbon fuels
are some of the key levers available in the country to reach the national energy and
climate targets. Given India's unique position as a rapidly developing economy with
significant dependency on fossil fuels, there will be a need for a just, orderly and
equitable transition to a low-carbon future. This involves ensuring energy accessibility
and affordability while advancing towards greener energy solutions. The India's energy
transition has enough scope for traditional and greener energy forms to coexist.
Across industries globally, multiple megatrends are shaping the
priorities of businesses, such as technology, green energy, supply chain capabilities, and
talent. HPCL is aware of changing trends and is constantly reworking its strategies and
actions to be relevant and future-ready. Your Company is making significant investments
and building capabilities during this phase of rapid technological shifts and the energy
transition scenario. Your Company remains resolute in delivering consistent and
responsible growth through sustainable business models.
Together, we are committed to delivering happiness to millions of
lives, achieving shared success and reaching new milestones in the years to come.
I would like to express my sincere gratitude to the Ministry of
Petroleum & Natural Gas, state governments and various statutory and local bodies for
their invaluable guidance and unwavering support.
I would also like to extend my heartfelt thanks to all our customers,
shareholders, business associates, employees and other stakeholders for their unflinching
commitment and support. Additionally, I would like to convey my sincere appreciation to
the Board of Directors for their thoughtful and prudent guidance.
Thank You
Pushp Kumar Joshi