Hindustan Petroleum Corporation Limited: history, ownership, mission, how it works & makes money

A Brief History of Hindustan Petroleum Corporation Limited

Hindustan Petroleum Corporation Limited (HPCL) was established in 1974 as a public sector enterprise in India, primarily engaged in refining and distributing petroleum products. The company was formed as a result of the merger of several other oil companies and has since developed into one of the leading players in the Indian oil and gas sector.

HPCL initially took over the entire oil refining business of the then-Hindustan Refinery Limited, which was a joint venture between the Government of India and the private sector. The company began its operations with a refining capacity of 2.5 million metric tonnes per annum (MMTPA) at its plant in Mumbai.

In 1996, HPCL was listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), making it one of the first oil companies in India to be publicly traded. The company’s Initial Public Offering (IPO) raised approximately ₹1,000 crore.

Over the years, HPCL has expanded its refining capacity significantly. By 2015, the total refining capacity reached approximately 15.33 MMTPA, with major refineries located in Mumbai and Visakhapatnam.

The company has also ventured into the retail sector, establishing a widespread network of fuel stations across India. As of 2023, HPCL operates about 16,000 retail outlets, providing fuels and lubricants to a large customer base.

HPCL has actively engaged in several infrastructure projects, including pipelines and storage facilities. The total length of its pipeline network is over 3,500 km, which includes both crude oil and product pipelines. The pipeline network enhances the company's distribution efficiency and reduces logistical costs.

In 2022, HPCL reported a turnover of approximately ₹5.76 lakh crore, with a net profit of around ₹10,640 crore. This financial performance reflects the company’s ability to manage operational challenges and effectively cater to the growing demand for petroleum products in India.

HPCL has also been a pioneer in adopting sustainable practices and has invested significantly in renewable energy projects. The company has set a target of achieving 200 MW of renewable energy capacity by 2025 as part of its commitment to sustainability.

In terms of market capitalization, HPCL was valued at approximately ₹63,000 crore as of October 2023, positioning the company among the top players in the Indian oil and gas sector. The stock has shown resilience and growth, reflecting investor confidence amid a fluctuating global oil market.

A Who Owns Hindustan Petroleum Corporation Limited

Hindustan Petroleum Corporation Limited (HPCL) is a significant player in the Indian oil and gas sector. As of October 2023, the ownership structure of HPCL is as follows:

In the fiscal year 2022-2023, HPCL reported a total income of ₹3,42,518 crore (approximately USD 43.1 billion), with a net profit of ₹13,722 crore (about USD 1.7 billion). The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was ₹23,542 crore (around USD 2.9 billion), showcasing operational efficiency despite the volatility in crude prices.

HPCL’s market capitalization as of October 2023 stood at approximately ₹66,000 crore (USD 8.2 billion), reflecting its significant presence in the Indian market. The company's P/E ratio was noted to be around 10.2, indicating an attractive valuation compared to industry peers.

The shareholding pattern indicates a strong presence of institutional investors, with the Government of India maintaining a majority stake. This state ownership allows HPCL to benefit from government policies aimed at enhancing energy security and affordability in the country. The significant stake held by ONGC, which owns a 49.13% interest, strengthens the strategic partnership between the two entities, facilitating synergies in operations and exploration.

In terms of geographic distribution, HPCL operates more than 16 refineries across India, with a total refining capacity of approximately 19 million metric tonnes per annum (MMTPA). The company has expanded its reach with over 18,000 fuel stations, ensuring extensive availability to consumers.

Moreover, HPCL is actively engaged in various joint ventures and collaborations with global entities, further enhancing its operational capabilities and expanding its product offerings. The company's performance in the renewable energy sector and biofuels is an area of focus, aligning with the global shift towards sustainable energy sources.

As of October 2023, HPCL's stock price fluctuated around ₹450 per share, demonstrating resilience in a challenging market environment. The dividend yield for the stock was reported at approximately **7.5%**, suggesting a healthy return for investors. This performance is bolstered by a robust dividend policy, which has consistently rewarded shareholders with attractive payouts over the years.

Hindustan Petroleum Corporation Limited Mission Statement

Hindustan Petroleum Corporation Limited (HPCL) is a flagship oil and gas company in India, focusing on refining and marketing petroleum products. Its mission statement emphasizes its commitment to delivering high-quality products while ensuring customer satisfaction and sustainable development. HPCL aims to leverage advanced technology to maintain operational excellence and contribute positively to the nation’s energy security.

The company’s mission statement is expressed through several key principles:

• To be a nationally admired company with a passion for excellence.
• To innovate continuously and adopt advanced technologies.
• To enhance customer satisfaction through quality and service.
• To ensure a sustainable and environment-friendly operational approach.

Financial Overview

As of the fiscal year ending March 31, 2023, HPCL reported a total income of ₹3,00,535 crores, showing a strong performance in the highly competitive oil and gas sector. Here are some key financial metrics:

HPCL’s mission also involves making strategic investments to enhance its refining capacity and ensuring the availability of high-quality fuels. The company currently has a refining capacity of approximately 17.8 million metric tonnes per annum (MMTPA).

Strategic Goals Aligned with Mission

In alignment with its mission statement, HPCL has set forth several strategic goals:

• Expansion of retail outlets from approximately 17,000 to 30,000 by 2025.
• Investment of ₹60,000 crores over the next five years in energy transition, including renewable energy projects.
• Improving energy efficiency by 10% across its operations.

Corporate Social Responsibility (CSR)

The mission statement of HPCL also reflects its commitment to corporate social responsibility. The company allocated approximately ₹120 crores in the fiscal year 2022-2023 towards various CSR initiatives, focusing on education, health care, and rural development.

Conclusion

HPCL aims to maintain its position as a leader in the oil and gas sector while upholding its mission of excellence, innovation, and sustainability. The integration of these principles into its operations guides the company toward long-term growth and success.

How Hindustan Petroleum Corporation Limited Works

Hindustan Petroleum Corporation Limited (HPCL) is a major player in India’s oil and gas industry, primarily engaged in refining and marketing petroleum products. HPCL's operations framework primarily consists of refining crude oil, distributing and marketing petroleum products, and engaging in upstream operations through joint ventures and collaborations.

As of FY2023, HPCL reported a total revenue of ₹6,52,869 crore, marking an increase from the previous year's revenue of ₹5,58,856 crore. The company’s net profit for FY2023 stood at ₹14,929 crore compared to ₹10,083 crore in FY2022.

HPCL operates two major refineries located in Mumbai and Visakhapatnam, with a combined refining capacity of approximately 17.80 million metric tonnes per annum (MMTPA). The refinery in Mumbai has a capacity of 7.5 MMTPA, while the Visakhapatnam facility has a capacity of 8.3 MMTPA.

Product Portfolio

HPCL's product offerings are extensive, comprising various grades of petroleum fuels, lubricants, and special products. The core products include:

• PMS (Petrol)
• HSD (High-Speed Diesel)
• SKO (Kerosene)
• LPG (Liquefied Petroleum Gas)
• Lubricants
• Specialty Products

In terms of market share, HPCL holds approximately 25% of the Indian petroleum products market.

Geographical Presence

HPCL has a vast distribution network with over 18,000 retail outlets across India, enabling it to reach a wide customer base. The company also has a significant presence in the aviation fuel market with over 60 airports serviced.

Financial Metrics

Sustainability and CSR

HPCL is actively involved in sustainability efforts, focusing on reducing carbon emissions and promoting the use of renewable energy sources. In FY2023, HPCL invested ₹350 crore in various Corporate Social Responsibility (CSR) initiatives, focusing on education, healthcare, and women empowerment.

The company is also exploring partnerships in the renewable energy sector, eyeing 1 GW of solar power generation capacity by 2025.

Market Position

HPCL is strategically positioned among the top oil marketing companies in India, alongside Indian Oil Corporation Limited (IOCL) and Bharat Petroleum Corporation Limited (BPCL). The competitive advantage arises from its extensive refinery capacity, strong brand reputation, and a robust supply chain.

As of October 2023, HPCL's stock is traded at approximately ₹290, with a market capitalization of around ₹69,000 crore.

The company’s dividends have also been consistent, with a payout ratio of 25% for FY2023. The latest dividend declared was ₹10 per share.

Conclusion

In conclusion, HPCL operates in a complex environment shaped by global oil prices, regulatory changes, and evolving consumer preferences. Its operational excellence, coupled with financial growth, positions it favorably in the Indian oil and gas landscape.

How Hindustan Petroleum Corporation Limited Makes Money

Hindustan Petroleum Corporation Limited (HPCL) operates primarily in the oil and gas sector, where its revenue generation mechanisms are multifaceted. The company engages in refining petroleum products, marketing, and distribution across various segments.

Refining Operations

HPCL has a total refining capacity of approximately 16.5 million metric tonnes per annum (MMTPA). The company operates two refineries located in Mumbai and Visakhapatnam. In FY 2022-23, HPCL reported a throughput of around 15.4 million metric tonnes across its refineries. The refining segment contributes significantly to the company’s revenue.

Product Portfolio

HPCL's product portfolio includes a wide range of fuels and lubricants. Key products include:

• Petrol
• Diesel
• Kerosene
• Liquefied Petroleum Gas (LPG)
• Lubricants

In FY 2022-23, HPCL sold around 22.5 million tonnes of petroleum products, generating substantial revenue streams from both retail and wholesale sales.

Marketing and Distribution

HPCL has a robust marketing network with over 18,700 retail outlets across India. The company focuses on expanding its market reach, enhancing distribution channels, and increasing customer engagement through various loyalty programs.

Financial Performance

In FY 2022-23, HPCL reported total revenue of approximately ₹ 4.14 trillion (about $50 billion). Net profit for the same period was around ₹ 26.6 billion (approximately $320 million), reflecting a profit margin of about 0.64%.

Revenue Breakdown

The revenue breakdown by segment for HPCL in FY 2022-23 is as follows:

International Operations

HPCL has also expanded its footprint internationally, with operations in various countries. The company’s international revenue amounted to approximately ₹ 60 billion in FY 2022-23, coming from exports of petroleum products.

Cost Structure

HPCL's cost structure is heavily influenced by crude oil prices, refining margins, and operational expenses. In FY 2022-23, the average gross refining margin (GRM) was around $6.5 per barrel, indicating a robust performance in a volatile pricing environment.

Future Projections

Analysts project that HPCL's revenue growth will continue to be supported by increased domestic demand for petroleum products, with expectations of a compounded annual growth rate (CAGR) of 5-7% over the next five years. This growth is anticipated despite global economic uncertainties affecting oil prices.

In summary, HPCL generates revenue through a combination of refining operations, product sales, strategic marketing efforts, and international trade, all while navigating a dynamic industry landscape.