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Feb. 2006 Mumbai

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Contents
Contents
HPCL A Profile
Current Scenario
Initiatives
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HPCL
HPCL
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-
An Overview
An Overview
A Fortune 500 company - 2005
Rank
Turnover 436
Profit 412
An Integrated downstream refining and marketing company
Crude Thruput : 13.94 MMT
Market Sales : 20.09 MMT
Pipeline Thruput : 6.05 MMT
Market Capitalization : Rs.110 Bn.
Shareholders : Over 1 Lac
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Financial Highlights
Financial Highlights
5.3 4.5 4.4 GRM ($/Bbl)
84.41 77.43 66.79 Net Worth
12.77 19.04 15.37 Net Profit
646.90 563.33 526.98 Turnover
FY 05 FY 04 FY 03 Rs. Billion
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Market Sales
Market Sales
10.5
2.3
6.0
0.8
10.9
2.5
5.8
0.9
7.9
1.9
3.9
0.8
0
5
10
15
20
FY 04 FY 05 A/D 05
Market Sales (MMT)
Retail LPG Direct Sales Exports
HPC Market Sale (in MMT) HPC Market Sale (in MMT)
19.5 20.1
14.4
16.9 % Overall
31.6 % Lubricants
25.3 % LPG
15.6 % Aviation
10.2 % Ind. & Cons.
21.5 % Retail
HPC Market Share
Market Share (Apr/Dec05) Market Share (Apr/Dec05)
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Contents
Contents
HPCL A Profile
Current Scenario
Initiatives
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Crude/ Product Price Mismatch
Crude/ Product Price Mismatch
Product Prices
Oil Prices
23.34
42.25
40.99
33.63
44.58
44.56
% Change
58.12 40.31 56.66 Brent Crude Oil ($/Bbl)
625.00 367.09 452.78 LPG ($/MT)
70.57 47.86 68.13 SKO (AG) ($/Bbl)
63.04 45.40 64.01 HSD (AG) ($/Bbl)
64.60 47.70 63.74 MS (Sing) ($/Bbl)
56.86 37.55 54.29 Indian Basket ($/Bbl)
Current Apr-Dec
04
Apr-Dec
05
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International Price Trend
International Price Trend
78.39
60.54
59.79
49.47
43.38
32.37
64.95
71.78
61.36
53.81
36.88
42.79
65.42
60.23
53.68
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Indian Basket of Crude Gas Oil (AG) Gasoline (Sing)
Fluctuations in
Crude Product cracks
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Fluctuating Heavy / Light Crude Spread
Fluctuating Heavy / Light Crude Spread
30.00
35.00
40.00
45.00
50.00
55.00
60.00
65.00
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Brent Dubai
US$ / Bbl
1.6
12.1
2.6
6.4
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Gross Marketing Margins on MS & HSD
Gross Marketing Margins on MS & HSD
-5000
-4000
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-1000
0
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MS Actual Margin
HSD Actual Margin
Normal Margin
Rs / KL
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Current Subsidies on SKO (PDS) & LPG (Dom.)
Current Subsidies on SKO (PDS) & LPG (Dom.)
215.15 13.23 Subsidy absorbed by Oil Companies
22.58 0.82 Subsidy given by Govt.
237.73 14.04 Total Subsidy to Customer
Dom LPG
(Rs./Cyl)
PDS SKO
(Rs./Ltr)
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HPCL Performance in Current Fiscal
HPCL Performance in Current Fiscal
Crude Thruput : 9.7 MMT
Market Sales : 14.4 MMT
Net Loss : Rs. 16.08 billion
Loss incurred for the first time
Negative Margins on MS & HSD
High subsidies on SKO & LPG
Changes in Duty structure impacting refining margins
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Steps taken to reduce Industry losses
Steps taken to reduce Industry losses
Increase in Retail Selling Prices : In June 2005 & Sept. 2005
Loss sharing by Upstream companies : ~ Rs. 140 billion
Loss sharing by Refineries : ~ Rs. 54 billion
Likely to issue bonds in current fiscal towards the subsidy impact
Target value for the Industry: ~Rs. 115 billion
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Rangarajan
Rangarajan
Committee on Pricing
Committee on Pricing
Recommendations of the Committee :
MS/HSD:
Reduction in Custom duty on MS & HSD -10% to 7.5%
Trade Parity Pricing for MS & HSD
Mix of Import Parity & Export Parity - 80:20
Specific Excise Duties on MS & HSD
Rs.14.75/Ltr on MS and Rs.5/Ltr on HSD
Retail pricing of MS & HSD to be fully market determined
Increase in RSP : MS - Rs.1.21/ Ltr, HSD - Rs.1.96/ Ltr
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Rangarajan
Rangarajan
Committee on Pricing
Committee on Pricing
Recommendations of the Committee :
SKO/LPG:
SKO Subsidy to be limited to BPL families
LPG Subsidy to be phased out by 2007.
One time price increase of Rs.75/Cyl and gradual price increases
to remove subsidy.
Increase cess on ONGC/OIL crude to Rs.4800/MT
Cess to be used for subsidy on SKO & LPG
Govt. to bear total Subsidy on PDS SKO & Dom. LPG
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Contents
Contents
HPCL A Profile
Current Scenario
Initiatives
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Refinery Initiatives
Refinery Initiatives
Yield Improvements
Installing residue conversion facilities (Delayed Coker)
LPG yield increased by 40% and MS by 25%
Quality up-gradation projects
Compliance of Euro III Emission control norms ~Rs. 35 billion
Upgradation of Lube Oil Base Stock for Grade II Lubricants
Oil Price Risk Management desk to be operational shortly
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Refinery Initiatives
Refinery Initiatives
Capacity Additions and Expansions
Mumbai Refinery from 5.5 to 7.9 MMTPA
Visakh Refinery from 7.5 to 8.3 MMTPA
Plans to go up to ~12 MMTPA
New Grass Root refinery
Self sufficiency thru new refinery at Bhatinda in North
Possible participation of BP being discussed
Exploring feasibility of setting up of export oriented refinery at
East Coast
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Pipelines
Pipelines
Existing Pipelines
Visakh Secunderabad 572 Kms 5.38 MMTPA
Mumbai Pune 161 Kms 3.67 MMTPA
Mangalore Bangalore (JV) 362 Kms 5.60 MMTPA
Pipeline Extension
Mumbai-Pune to Solapur 352 Kms 4.30 MMTPA
Target completion by Sep. 06 at a cost of Rs 3.35 billion
New Pipeline
Mundra Delhi 1048 Kms 5 MMTPA
Target completion by May 07 at a cost of Rs. 16.24 billion
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Retail Branding
Retail Branding
First to introduce Branded Outlets
36 % Retail outlets converted to Club HP
50% sales thru Club HP outlets
12 Club HP helpline operational
60 % Club HP Outlets selling Power
12 % of total sale converted
Addl. margins of Rs. 120 million in
Apr/Dec 05
Targeted conversion of 18% with
addl. margin of Rs. 290 million
78 % Club HP Outlets selling Turbojet
8 % of total sale converted
Addl. margins of Rs. 76 million in
Apr/Dec 05
Targeted conversion of 15% with
addl. margins of Rs. 210 million
Outstanding
Vehicle
&
Customer
Care
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Rural Strategy
Rural Strategy
First to set up branded Rural
Outlets : Hamara Pump
Providing quality product
At right price
Near the point of consumption
Tie-ups for Agri Inputs, Farming
Equipment & Micro Financing
Over 500 pumps in operation
M/s Heart king Agency, Masamchery,
Dist Kanjipuram,Tamil Nadu
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Community Kitchens
Community Kitchens
1434 Rasoi Ghar as of Dec. 05
Responsible
Corporate
Citizen
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Aviation Business : Fuelling the Growth
Aviation Business : Fuelling the Growth
ATF Growth Story
-2
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18
28
38
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HPC 3.8 0.8 23.3 47.8 25.3
BPC -1.1 1.6 9.2 4.8 12.7
IOC 0.9 3.1 7.4 12.0 14.6
FY 02 FY 03 FY 04 FY 05 A/D 05
G
r
o
w
t
h

(
%
)
HPC zooming
ahead of Ind.
Continuously achieving highest
growth rate in industry
Foreign airline customers base
expanded to 28 from 3 in FY 03
Widening ASF network for better
customer reach
2 new ASFsplanned
Only Indian company Only Indian company
Nominated by International Air
Transport Association (IATA)
on fuel suppliers advisory
committee
Among top 30 (Ranked 17
th
)
Companies adjudged as
'World's best jet fuel marketer'
in survey conducted by the
Armbrust Aviation group, USA
Having ISO 14001 certified
Aviation Facilities
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Vertical Integration : Exploration & Production
Vertical Integration : Exploration & Production
Acquire E&P interests both in India and out of India
MOU with GAIL for overseas exploration opportunities
Participate in NELP VI on its own as well as thru collaborative
partners
Develop expertise of Prize Petroleum
J oint Venture for oil exploration and production
Awarded 1 Cambayonshore block under NELP IV in consortium with
GSPC
Service contract for development of 3 marginal onshore fields of ONGC
50% participating interest in mini oil producing field at Sanganpur,
Gujarat
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New Businesses : Gas
New Businesses : Gas
Have presence in Natural Gas Market
MOU with GAIL for City Gas Distribution in the States of
Gujarat and Rajasthan
Joint Venture with GAIL for the distribution and
marketing of Green Fuels in AP and in MP
Possibility of Equity Participation in Shells LNG terminal at
Hazira
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Distinctions :
Distinctions : Encouragement that propels us to greater heights
Excellent performance against
MOU for 14 years in succession
Forecourt Retailer of the year -
2005 (KSA Technopak- ICICI
Bank)
Most Respected company in
petroleum sector (Business
World)
Best Workplace practices (Asian
Forum on Corporate Social
Responsibility, Philippines)
Golden Peacock Innovation
Award for 2004 (Institute of
Directors)
Award for Innovative Brand
Strategies (DAKS Awards for
Brand Excellence)
Performance
Professionalism Innovation
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Changing face of Retail Marketing
Changing face of Retail Marketing
Thank You
Outstanding Contribution
Petro Retailing Business
- DEW Journal
Most Respected Company
- Business World
Forecourt Retailer
-KSA Technopak / ICICI Bank