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Mukesh Kumar Surana transformed Hindustan Petroleum Corporation into a profit-focused company and earned it the Maharatna status
- Dec 11, 2019,
- Updated Dec 13, 2019 9:28 PM IST
On March 31, 2016, the day before Mukesh Kumar Surana took over as the Chairman and Managing Director of Hindustan Petroleum Corporation (HPCL), the Indian cricket team lost a semi-final match to West Indies in the Twenty20 World Cup. India's journey in the tournament had ended but Surana was drawing up a mid-term strategy for HPCL, naming it Twenty20. One of the aims was to get the oil refining and marketing company Maharatna status.
The criteria for Maharatna status includes a three-year record of annual net profit of over Rs 5,000 crore, net worth of Rs 15,000 crore-plus and turnover of at least Rs 25,000 crore. Among these, HPCL was lagging only in profitability, which was difficult to achieve without increasing the standalone capacity. Surana, therefore, worked towards enhancing crude processing volumes, margins and efficiencies. In the first year itself, the standalone profit of HPCL jumped by 60 per cent to Rs 6,209 crore in 2016/17 from Rs 3,862 crore the previous year. The company reported profits of over Rs 6,000 crore in the next two financial years and finally got the Maharatna tag.
In 2018/19, HPCL recorded its highest ever standalone revenue of Rs 2.97 lakh crore, up by 22 per cent compared to the previous year. The net profit slipped marginally to Rs 6,029 crore from Rs 6,357 crore because of high volatility in crude oil prices. HPCL's two major refineries in Mumbai and Visakhapatnam recorded their best ever throughput in the year. This helped the company enhance its refining throughput to 18.44 million tonnes (MT) from 18.3 MT, with a capacity utilisation of a record 117 per cent.
"In 2015/16, we had processed 17.23 MT crude. The refinery output has been enhanced by 1.2 MT in three years without adding new capacities. We achieved this through debottlenecking and optimal use of existing capacities," says Surana. The company has also optimised the secondary processing facilities, reduced the shutdown time and adhered to the throughput target.
"The fixed cost for processing each barrel of crude is the same for us. So, we have to process more crude oil to make more profits. We reduced the cost of energy and logistics, besides optimising capacity utilisation," says Surana.
As part of reducing freight costs, the company operationalised four dedicated railway rakes to transport LPG. Two more will start operations this year. It also completed construction of a 3,500 km cross-country gas pipeline. In marketing, HPCL achieved its highest overall sales volume of 38.7 MT in 2018/19, 4.9 per cent more than the previous year.
On March 31, 2016, the day before Mukesh Kumar Surana took over as the Chairman and Managing Director of Hindustan Petroleum Corporation (HPCL), the Indian cricket team lost a semi-final match to West Indies in the Twenty20 World Cup. India's journey in the tournament had ended but Surana was drawing up a mid-term strategy for HPCL, naming it Twenty20. One of the aims was to get the oil refining and marketing company Maharatna status.
The criteria for Maharatna status includes a three-year record of annual net profit of over Rs 5,000 crore, net worth of Rs 15,000 crore-plus and turnover of at least Rs 25,000 crore. Among these, HPCL was lagging only in profitability, which was difficult to achieve without increasing the standalone capacity. Surana, therefore, worked towards enhancing crude processing volumes, margins and efficiencies. In the first year itself, the standalone profit of HPCL jumped by 60 per cent to Rs 6,209 crore in 2016/17 from Rs 3,862 crore the previous year. The company reported profits of over Rs 6,000 crore in the next two financial years and finally got the Maharatna tag.
In 2018/19, HPCL recorded its highest ever standalone revenue of Rs 2.97 lakh crore, up by 22 per cent compared to the previous year. The net profit slipped marginally to Rs 6,029 crore from Rs 6,357 crore because of high volatility in crude oil prices. HPCL's two major refineries in Mumbai and Visakhapatnam recorded their best ever throughput in the year. This helped the company enhance its refining throughput to 18.44 million tonnes (MT) from 18.3 MT, with a capacity utilisation of a record 117 per cent.
"In 2015/16, we had processed 17.23 MT crude. The refinery output has been enhanced by 1.2 MT in three years without adding new capacities. We achieved this through debottlenecking and optimal use of existing capacities," says Surana. The company has also optimised the secondary processing facilities, reduced the shutdown time and adhered to the throughput target.
"The fixed cost for processing each barrel of crude is the same for us. So, we have to process more crude oil to make more profits. We reduced the cost of energy and logistics, besides optimising capacity utilisation," says Surana.
As part of reducing freight costs, the company operationalised four dedicated railway rakes to transport LPG. Two more will start operations this year. It also completed construction of a 3,500 km cross-country gas pipeline. In marketing, HPCL achieved its highest overall sales volume of 38.7 MT in 2018/19, 4.9 per cent more than the previous year.