HPCL

The Refinery industry comes under Energy group. It’s a commodity type industry.

Industry Strengths

Hugh refinery capacities in India and now India is an exporter of petroleum products
No substitute and customers have to pay the mandated prices
Huge and growing demand for crude and gas from industrial sector where it is used for power generation
Hugh and growing demand for gas like LPG and fuel like kerosene from domestic sector

Industry Weakness

Raw materials, crude oil and gas are largely imported and subjected to fluctuating prices
Crude oil supply is controlled by OPEC which influences the price
High level of government involvement
Heavily dependent on subsidies from government
Capital intensive, long gestation periods and high risk
Impacted negatively by weak rupee

Growth Drivers

Global economic growth which leads to increasing demand for crude oil and gas
Government proactive policies aimed towards India’s energy security
Government incentives to promote the sector especially to foreign and Indian private players.
High demand from aviation, power generation, fertilizer and road transportation sector
Growing industrial and domestic consumption

The Company is engaged in the business of refining of crude oil and marketing of petroleum products. HPCL is the third-largest refining company in India with ~19% market share in the total sales of petroleum products in the country.

The company owns and operates two refineries— Mumbai refinery of 7.9 mtpa capacity and Vizag refinery of 8.3 mtpa capacity. It has a 16.95% equity stake in Mangalore Refineries (a subsidiary of ONGC) with an operable capacity of ~15 mtpa. It has a 13,802-strong nation-wide retail outlet network, the second largest in India after IOCL.

Segments and Products

It operates through two segments:
1.Downstream, and
2.Exploration and Production of Hydrocarbons.

The Downstream segment engages in refining, marketing and transportation of petroleum products. It offers motor spirit, high-speed diesel and liquefied petroleum gas (LPG).

Its products and services include aviation turbine fuel; bulk fuels and petroleum products that are marketed to industrial consumers; LPG (HP Gas); Lubes (HP Lubes), and product pipelines.

Its refineries upgrade the crude petroleum into various products and over 300 grades of lubricants, specialties and greases.

The Company's marketing infrastructure includes a network of installations, depots, retail outlets, aviation service stations and LPG distributors.