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transcript
Presentationfor
Investors
FY 2004
2
PRESENTATION OUTLINE
OIL INDUSTRY OVERVIEW
COMPANY OVERVIEW
FINANCIAL PERFORMANCE
CAPITAL EXPENDITURE PLANS
GLOBALIZATION / DIVERSIFICATION
SHAREHOLDERS’ RETURN
SUBSIDIARIES OVERVIEW
OIL INDUSTRY OVERVIEW
Current scenario
4
PETROLEUM PRODUCTS - HISTORICAL DEMAND GROWTH
Source: PPAC, FY04 company estimates
Consumption grew at a CAGR of 2.7% p.a. over the last 5 years & Production registered a CAGR of 9.2% p.a.
Demand expected to grow at a CAGR of 3.7% p.a. during X plan period (2002-03 to 2006-07)
9783
100 100 99 104 104 109 108118
0.0
20.0
40.0
60.0
80.0
100.0
120.0
MMTPA
FY00 FY01 FY02 FY03 FY'04
Consumption Production
5
DOMESTIC CRUDE AVAILABILITY*
*Including condensateRefining capacities as on 1 April
The gap being met through imports
32.0
112.5
32.5
114.6
32.0
114.7
33.1
116.9
33.4
127.4
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
MM
TPA
FY00 FY01 FY02 FY03 FY04
Crude Production Refining Capacity
6
OIL INDUSTRY STRUCTUREUPSTREAM Oil & Natural Gas Corporation Ltd.
Oil India Ltd. (Exploration & Production)
DOWNSTREAM
(Refining & Marketing)
Indian Oil Corporation Ltd.
IBP Ltd. (Pure Marketing)
Chennai Petroleum Corporation Ltd.
Bongaigaon Refinery & Petrochemicals Ltd.
(Pure Refining)
Hindustan Petroleum Corporation Ltd.
Bharat Petroleum Corporation Ltd.Kochi Refinery Ltd.
Numaligarh Refinery Ltd.
(Pvt. Sector Refining)
Mangalore Refinery & Petrochemicals Ltd.*
Reliance Industries Ltd.
(Gas Transport & Distribution)GAIL India Ltd.* Pure Refining Subsidiary of ONGC
(Pure Refining)
7
INDUSTRY OVERVIEW- 31.3.2004
Market Size 107.5 MMT
IOC48%HPCL
17%
BPCL19%
Others16%RPL
26%
IOC42%
HPCL10%
BPCL14%
ONGC8%
Refining Capacity 127.4 MMT
IOC46%
HPCL12% BPCL
9%
PIL33%
Product Pipelines 62.3 MMT
Share includes subsidiary companies
Crude Pipelines 28.5 MMT
IOC100%
IOC is the only downstream company that owns crude pipelines
8
SECTOR OVERVIEW
Sector moved from APM to Market Determined Pricing Mechanism (MDPM)
Entry of private and multinational companies in the oil sector imminent
Prices of MS/HSD generally reviewed fortnightly
Subsidies on SKO/LPG reduced- to be phased out gradually over the next 2 years
COMPANY OVERVIEW
India’s largest downstream company
10
INDIA’S NO. 1 DOWNSTREAM COMPANY
(Rs/Crore) Rank Turnover 130203 1
Net Profit 7005 1
Net Worth 23047 1
Total Assets* 53852 1
Market Cap 57944 1
Exchequer Contribution 35960 1
Indian Oil is India’s largest downstream oil company 19th largest oil company in the world- Fortune Global 500
* Excluding depreciation
INDIANOIL OVERVIEW
(MMT)
FY’03 FY’04
Growth
Refining Thru’put 35.29 37.66
6.7%
Product Sales Volume* 47.56
48.61 2.21%
Pipeline Thru’put 41.11 45.17
9.88%
Fortune “Global Rank” improved to 189 in
the current year from 191 in the previous year.
Consistently “AAA” rated by ICRA since the
beginning
International ratings by both Standard & Poor’s
and Moody’s
* Including exports
12
REFINERIES – OVERVIEW
MumbaiVizag
Chennai
Cochin Narimanam
Bongaigaon
Mangalore
Numaligarh
Panipat
Guwahati
Haldia
Barauni
Mathura
Koyali
Digboi
Paradeep
Jamnagar
Bina
Other Companies’ Refineries
Existing
Under Construction/Proposed
IOC’s Refineries
Existing
Under Construction/Proposed
Subsidiary Companies
Owns 7 refineries with 41.3 MMT cap. – 32.5% REFINING SHARE
67% capacity catering to northern/western region - HIGH DEMAND & GROWTH AREAS
All refineries linked by crude pipelines - LOW TRANSPORTATION COST
All refineries linked by product pipelines- MOST COST EFFECTIVE EVACUATION SYSTEM
Potential for brownfield expansions in least time
Cuddalore
As on 1 April’04
Bhatinda
Key Facts
13
25.5338.30
56.5964.80
21.0726.50
2003-04 2006-07
Demand
Supply
(Deficit)/Surplus
KEY REFINERIES IN HIGH DEMAND REGIONS
About 67% of IOC’s refining capacity is located in close proximity to the high demand northern and western regions
(17.35)
38.3032.24
18.2014.90
(20.10)
2003-04 2006-07
Western Region
Source: Company estimates FY04, and X Plan sub group report
MM
TM
MT
Northern Region
Southern Region
MM
TM
MT
Eastern Region
Koyali
Mathura
Bhatinda
Salaya
Kandla
Panipat
14
HIGHLIGHTS - REFINERIES
Average Refinery Capacity utilisation declined marginally
During the year refining capacity increased to 41.35 MMT as on 31.3.04
Strategic inland refineries locations with most effective supply and evacuation system through pipelines
All refineries meet product specification requirement in line with environmental regulations
92.4991.08
88.0088.5089.0089.5090.0090.5091.0091.5092.0092.50
(%)
FY 03 FY 04
72.8
73.2
72.00
72.20
72.40
72.60
72.80
73.00
73.20
73.40
(%)
FY 03 FY 04
Distillate yield highest ever
15
PROACTIVELY ADDRESSING ENVIRONMENTAL ISSUES
IOC has proactive plans to meet the prospective Euro/ Bharat norms
Road Map to Vehicular Emission Norms
Euro II Euro III Euro IVMetros IntroducedApril 2005 April 2010Mega Cities* April 2003April 2005 April 2010Entire Country April 2005April 2010
IOC Investment Plans** Rs/CroreHSD Quality Improvement 1046MS Quality Improvement 2233
IOC shall be able to meet the environmental regulations well in time
*Bangalore, Hyderabad, Pune, Ahmedabad, Surat, Kanpur, Agra** Estimated cost
16
PERFORMANCE - REFINERIES
2.1 2.0
4.1
5.3
0
1
2
3
4
5
6
$/Bbl
FY01 FY02 FY03 FY04
Gross Refining Margins Refining margins in
tandem with international margins
Refineries accounts for about 50% of IOC’s earnings during FY 04
Margin enhancement opportunities thru’ stream sharing & improving crude/supply logistics
17
PIPELINES – OVERVIEW
Product
Proposed Product
Crude Oil
Proposed Crude
Product
Proposed Product
Crude Oil
Other Companies’ Pipelines
IOC’s PipelinesMumbai Vizag
Panipat
Guwahati
Koyali
Nahorkatiya
Haldia
Mathura
Manmad
Vijayawada
Kochi
BarauniKanpur
Bhatinda
Kandla
Vadinar
Chaksu
Ahmedabad
Jalandhar
Jodhpur
BudgeBudge
Kot
DelhiBongaigaon
Siliguri
Salaya
7,586 kms. of crude / product pipelines with a capacity of 56.85 MMT
Owns approx. 62% of total throughput capacity (downstream)
Low cost crude transportation to all refineries
Low cost evacuation system linked to all refineries
Two SBM near Vadinar
Key Facts
SaharanpurMeerut
Sidhpur
LucknowDigboi
Tinsukia
Karur
Chennai
Madurai
Tundla
Navgam
As at 1 April, 2004
Paradeep
18
HIGHLIGHTS - PIPELINES
Capacity utilisation declined marginally
88.3
82.9
60.0
65.0
70.0
75.0
80.0
85.0
90.0
(%)
FY03 FY 04
Capacity utilization lower due to commissioning of new pipelines.
Total capacity of pipelines increased from 52.75 MMTPA to 56.85 MMTPA during FY 04.
19
SMPL- Mathura 189.74 931.421330.6
HBCPL- Barauni 481.8 475.42 679.6
SIGNIFICANT UPSIDE
(1) Source: Company estimates
Significant increase in pipelines earnings on recovery of tariff based on rail freight
Product PipelinesAverage APM Rate(1) (Rs/MT)
Average Rate as per Railway Freight (Rs/MT) 70% 100%
KAPL-Sabarmati 63.92 154.7220.1
GSPL-Siliguri 168.66 454.3649
BKPL-Kanpur 175.81 676.06965.8
HBPL-Barauni 101.25 537.46767.8
MJPL-Jalandhar (Ex-Mathura) 118.77 537.46767.8
KBPL (Kandla - Bhatinda) 1026.28 1295.14 1850.2
KNPL-Navagam 51.19 140.14200.2
KVSPL-Sidhpur 61.3 274.19391.7
MTPL-Tundla 140 140.14200.2
Crude Pipelines
20
MARKETING OVERVIEWCONTROL RETAIL OUTLET SITES
7,239 7,5497870 8034
9127
0
2,000
4,000
6,000
8,000
10,000
FY00 FY01 FY02 FY03 FY 04
IOC is focused on strengthening its position and control in the retail segment
No
. o
f O
utl
ets
IOC Retail Outlets
29.5%35.1%
43.0% 42.4%
47.5%
5%
15%
25%
35%
45%
55%
F00 FY01 FY02 FY03. FY 04
% of Retail Outlet sitesOwned/taken over long lease
2765 retail outlets of IBP – 41.37% Company owned
21
SEGMENT MARKET SHARE* IOC has a market share of about 44% in retail
segment and about 63% in direct sales.
Direct Sales
62.7%0.3%
37.0%
IOC IBP Industry
Retail Sales
43.8%
7.3%
48.8%
IOC IBP Industry
*Among PSUs
22
PERFORMANCE - MARKETING
1.9 1.8
3.2 3.3
0
0.5
1
1.5
2
2.5
3
3.5
$/Bbl
FY01 FY02 FY03 FY04
Gross Marketing Margins Marketing accounts for
about 27% of IOC’s earnings during Apr-Mar’04
Margins have improved significantly post deregulation
Margins affected due to under recovery of subsidy on LPG/Kerosene
23
RESEARCH & DEVELOPMENT CENTRE
IOC’s world class R&D centre has won recognition for its pioneering work in the following:- Lubricants formulations- Refinery processes- Pipeline transportation- Bio-fuels
R&D has developed over 21,000 formulations of SERVO brand lubricants and greases
The centre has over 90 national and international patents to its credit
FINANCIAL PERFORMANCE
Sterling Performance
25
STRONG FINANCIAL PERFORMANCE
817
124
981
193
967
182
1105
93
1213
89
0
200
400
600
800
1000
1200
1400
Rs/Billion
FY00 FY01 FY02 FY03 FY 04
Sale of products (net) Sale of crude
(a) After commissions and discounts, exclusive of Company’s own use of oil
The revenues of the company have registered a CAGR of 8.5% over the past 5 years
26
STRONG AND CONSISTENT NET INCOME GROWTH
24 27 29
6170
0
10
20
30
40
50
60
70
Rs/Billion
FY00 FY01 FY02 FY03 FY 04
The net income has grown at a CAGR of 30.6% over the last 5 years
RONW 18.6% 18.1% 18.4% 35.7% 33.4%EPS (Rs.)* 20.92 23.29 24.70 52.35 59.97
* Bonus issue 2:1 during FY04
27
IOC FINANCIALS (Rs./Crore) FY 2003 FY 2004
SOURCES OF FUNDSNetworth 18928 23047Loan Funds 14495 12179Deferred Tax Liability 3873 4284
37296 39510APPLICATION OF FUNDSNet Fixed Assets 25370 27453Investments 5363 5596Working Capital 6563 6461
37296 39510
Borrowings reduced by 16% during FY04 Reserves increased by 22%
28
IOC FINANCIALS
FY 2003 FY 2004Gross Sales 120130 130392EBITDA 10864 12013Interest 788 453Depreciation 1662 1869Tax 2299 2686PAT 6115 7005
(Rs/Crore)
PAT increased by over 14.5% Interest cost reduced by 43%
29
RETURN ON INVESTMENT
FY’03 FY’04
Sales Revenues 120130 130392
EBITDA 10527 11847
Capital Employed 25321 28259
Return on Capital 41.6% 41.9%
Employed (ROCE)
(Rs/Crore)
Return on Capital Employed is significantly higher than IOC’s WACC, which is in the 10% range
30
PROFITABILITY RATIOS
FY’03 FY’04
Operating margin 7.7% 7.8%
Net profit margin 5.1% 5.4%
EPS (Rs)* 52.35 59.97
Cash EPS (Rs)* 66.58 75.97
IOC stock is trading at around 5 times cash earnings, reflecting an earnings yield of 20% per year
*EPS & Cash EPS for previous period adjusted for bonus issue of 1:2 in Aug’03
31
LIQUIDITY RATIOS
FY’03 FY’04
Total Debt:Equity 0.77:1 0.53:1
Long-term debt:equity 0.39:1 0.31:1
Interest cover(Times) 13.8 27.2
Phenomenal decrease in debt:equity ratio Interest Cover doubled
32
EBITDA CONTRIBUTION-SEGMENT WISE
45
2926
50
2723
0
10
20
30
40
50
(%)
FY 03 FY 04
Refineries Marketing Pipelines
CAPITAL EXPENDITURE PLANS
Consolidating Growth & Position
34
TOTAL Xth PLAN OUTLAY (2002-03 to 2006-07)
Total : 24,399 crore
Ref. Cap. Aug. & Yield Imp
25%
Petrochem.45%
Marketing3%
Ref. Quality Improv.
12%
R&D1%
Other Diversification
2%
Pipelines12%
(548)
(6149)
(3043)
(2826)(764)
(217)
Total Capital Expenditure FY 2005- 6256 crore
(10852)
35
CAPEX PLAN MAJOR PROJECTS
Estimated CostCompletion(Rs/Crore) Schedule
Ongoing Projects MS Quality Improvement Projects 2233 Jan-Sep’ 05New DHDT at Mathura (0.05%’S’ specs) 1046 Dec’ 04Panipat Refinery Expansion 3883 Apr’ 059 MMTPA Paradip Refinery Project 7500 2008-09Crude supply to Panipat through KBPL 777 Dec’ 04Production of LAB at Gujarat 1185 Aug’ 04Paraxylene & PTA at Panipat 4704 Aug’ 05Paradeep-Haldia Crude Pipeline 1178 Mar’06Naphtha Cracker Complex 6344 2007-08
36
CAPEX PLAN MAJOR PROJECTSLAB at Gujarat
Estimated Cost 1185 croreCompletion year August’04CapacityInputKerosene Stream ( TMTPA) 92Benzene (TMTPA) 40OutputLinear Alkyl Benzene (TMTPA) 120
37
Estimated Cost 4704 croreCompletion year August’05CapacityInputNaphtha (TMTPA) 500OutputParaxylene (TMTPA) 360PTA (TMTPA) 550
CAPEX PLAN MAJOR PROJECTSParaxylene & PTA at Panipat
38
Estimated Cost 6344 crore
Completion year* 2007-08
Capacity
Naphtha Cracker (TMTPA) 2170
LLDPE/HDPE Swing Unit (TMTPA) 350
HDPE Unit (TMTPA) 300
Polypropylene Unit (TMTPA) 600
MEG Unit (TMTPA) 250
*42 months after DFR approval and commissioning within 3 months
CAPEX PLAN MAJOR PROJECTSNaphtha Cracker Complex
39
Estimated Cost Rs.1178 crore
Completion year March’06
Main Line Capacity (MMTPA) 11
Tentative Length (Km)
-Offshore/Onshore 23
-Main Line 330 353
Tentative Dia (Inches)
-Offshore/Onshore 48
-Main Line 30
CAPEX PLAN MAJOR PROJECTSParadip - Haldia Crude Oil Pipeline
SIGNIFICANT INITIATIVES
Globalisation/Diversification - The path to growth
41
GLOBALISATION/DIVERSIFICATION
E & PDomestic
NELP-I, II & III: IOC, in consortium with ONGC/OIL as Operator, has obtained 11 blocks with equity stake in the range of 15%-30%.
CBM-I: IOC-ONGC consortium has 2 CBM blocks with IOC’s equity stake at 20% in each.
IOC has farmed-in with 27% participating interest in an Exploration Block in Assam-Arunachal Pradesh, with Premier Oil (38% & Operator), HOEC (25%) & OIL (10%).
IOC Board has also approved farm-in with 35% participating interest in an Exploration Block in Cachar, Assam, with Premier Oil (49% & Operator) & Essar Oil (16%). Farm-in agreement signed.
42
GLOBALISATION/DIVERSIFICATION
E & POverseas
Consortium of ONGC Videsh, Oil India & IOC awarded the Farsi Exploration block in Iran. IOC has a 40% stake in the block.
IOC – ONGC-VL Alliance, in consortium with BP and Occidental, has been participating in the bidding process for Kuwait Project for development of Northern Kuwait Oilfields.
GAS Dahej Terminal of Petronet LNG commissioned Expected positive contribution from Gas
business – Rs.670 crore in FY 2005
43
GLOBALISATION/DIVERSIFICATION
PETROCHEMICALS PX-PTA plant with PX- 360 TMT and PTA- 550
TMT capacity planned at Panipat for value addition of naphtha
LAB facility- 120 TMT at Gujarat refinery Naphtha Cracker Complex - 2.17 MMTPA
OVERSEAS DOWNSTREAM MARKETING
Entered into retail business in Sri Lanka thru’ Lanka IOC (WOS) – Trincomalee Tankfarm of 1 million KL taken over and supplies to LIOC commenced
WOS established in Mauritius for building infrastructure and enter into downstream business
SHAREHOLDERS’ RETURN
Wealth Maximisation
45
SHAREHOLDING PATTERN 31.3.2004
82.0%
9.1%3.5% 5.4%
GOI ONGC Public* Others
* Including employees
46
RETURN TO SHAREHOLDERS
Bonus 1981-821994-951999-002003-04
1:2 2:1 1:1 1:2
Periodic sharing of reserves to reward shareholders
Consistent dividend payment for the last 38 years
Dividend payment for FY 04 - 2453 Crore
95%110%
193%*210%
0%
50%
100%
150%
200%
250%
2000-01 2001-02 2002-03 2003-04
* Post bonus of 1:2
47
RETURN TO SHAREHOLDERSMarket Capitalisation
Highest market cap since listingThird position in market
capitalisation
15566 18093
57944
0
10000
20000
30000
40000
50000
60000
Rs./crore
31.3.02 31.3.03 31.3.04
SUBSIDIARIES OVERVIEW
Positive Contribution
SUBSIDIARIES OVERVIEW
10.5*
2.35
7.04
2.13
02468
101214
MMTPA
Ref. Cap. Crude Thru'put
CPCL BRPL
Refining capacity utilization for FY04
CPCL BRPL93.9% 90.5%
12.85
9.17
* 3MMTPA capacity added on 31 Mar’04
GROUP OVERVIEW
Combined synergies of IOC & IBP shall enable the company to tackle competition
Note: Domestic sales & Market share among PSUs
51
4.6
0%
20%
40%
60%
80%
100%
Market Share
IOC IBP
55.6%
46.8
4.2
0
10
20
30
40
50
60
MM
TPA
Sales Vol.
IOC IBP
51.0
51
FINANCIAL PERFORMANCE SUBSIDIARIES
Turnover PAT
FY ’03 FY04 FY ’03 FY’04
CPCL 80898697 303400
BRPL 1862 2849 178
304
IBP 877410535 88 215
Lanka IOC 65 725 4 7
(Rs/Crore)
52
FINANCIAL PERFORMANCE SUBSIDIARIES
IOC’s subsidiaries performing better- combined profits of BRPL, CPCL, IBP & LIOC increased by over 350 crores
Several initiatives launched to build on combined strength: Rationalisation of assets Optimisation of resources Sharing of refinery streams MOU’s for better business relations
53
MARKET CAPITALISATION SUBSIDIARIES
433 446281
1299
2160
1549
0
500
1000
1500
2000
2500R
s/C
rore
FY 03 FY 04
IBP CPCL BRPL
Phenomenal increase in market cap. of subsidiaries
54
Thank You