IOCL bets on petrochemical, gas marketing portfolios for growth

IOCL bets on petrochemical, gas marketing portfolios for growth

Petrochemical and gas marketing is the next big bet IndianOil Corp. Ltd (IOCL) is taking in a bid to

expand its business beyond the core of refining and marketing.

“We are bullish on our new businesses, that is, petrochemicals and gas marketing. There is

tremendous demand for petrochemicals, where we are now the second largest player in India,” said

B. Ashok, Chairman, IOCL.

IOCL, the country’s largest refiner and marketer, has 20% market share in the petrochemicals

segment and plans to invest Rs.43,000 crore for implementation of various petrochemical projects in

the next four years. In natural gas marketing, the company would be investing around Rs.7,800 crore

over the same period.

IOCL has implemented petrochemical projects worth Rs.20,800 crore up to 2015-16. Reliance

Industries is the market leader in petrochemicals with a 38% market share while Gail India holds a

15% market share and Bharat Petroleum Corporation Ltd and Haldia Petrochemicals Ltd account for

the remaining 27% between them.

Over the years, IOCL has been expanding its business verticals and into getting newer areas. While in

the pre-1999 era IOCL was only a refining and marketing company, post 1999 it has expanded into

petrochemicals and natural gas.

From 2009 onward, the company has expanded in the upstream or exploration and production

sector as well as alternative energy.

Going forward, we are implementing several petchem projects, one of them being the

polypropylene plant at Paradip, Orissa for Rs.3,150 crore. And we are confident that our bottomline

from the petrochemicals vertical will improve significantly in the years to come,” added Ashok.

In an emailed reply, IOCL said the additional investments it is making in the sector will further

enhance integration of its refineries with the petrochemical units with respect to feedstock, utilities,

return streams, etc. It will ensure continuous supply of feedstock and utilities at competitive price.

Apart from integration, value addition in the petrochemical streams is also envisaged.

At present Panipat (Haryana) and Koyali (Gujarat) refineries are integrated. Paradip (Odisha) and

Barauni (Bihar) are expected to be integrated in the next five years.

IOCL, which sells its petrochemical products under the brand of Propel, registered the highest ever

sales of petrochemicals at 2.538 million tonnes in 2015-16, as against 2.477 million tonnes in the

previous year. The Petrochemicals segment has contributed more than Rs.22,000 crore (5%) to the

total revenue. With petrochemical sector being one of the fastest growing sectors in the Indian

economy, IndianOil envisages petrochemicals to contribute 10% of the corporate revenue and 40%

in profits in the next three to five years.

“The corporation is now the second largest polymer supplier in the country with Propel grades

covering over 80% of the plastics applications, and with over 50 polymer grades introduced and

stabilised in the domestic market,” IOCL said in its fourth quarter statement.

With two new destinations, France and Germany, added during the year, Propel petrochemicals are

now being exported to 71 countries, and polymer intermediates to 53 countries, the statement


For financial year 2015-16, IOCL’s net profit was Rs.10,399 crore against Rs.5,273 crore in the last

fiscal. Income from operations for FY-16 came in at Rs.3.50 trillion as compared to Rs.4.37 trillion in

2014-15. Petchem contributes 5% of total income for IOCL. The segment contributed 30% of the

total profit before tax for FY16 against 35% for FY 15.

“Expanding into new businesses would give IOCL a natural hedge against its core business of refining

and marketing which is heavily dependent on crude oil price movements. Last fiscal 5% of IOCL’s

total revenue came from Petchem, providing it a good cushion against the inventory losses of

Rs.9,731 crore that the company registered,” said an analyst with a domestic brokerage on the

condition of anonymity as he is not allowed to talk to the media.

While China accounts for 25% of the demand from the global petrochemicals market, India is the

leader in the rest of Asia-Pacific, with increasing demand for products containing petrochemicals.

India’s flourishing manufacturing sector is expected to give a further fillip to the regional market for


In the natural gas marketing segment, for the first time in 2015-16, IOCL imported nine Liquefied

Natural Gas (LNG) cargoes on its own. This is in addition to LNG sourced through its joint venture

Petronet LNG Ltd.

IOCL marketed 1.929 million tonnes of natural gas during the year 2015-16, registering a 6.9%

growth in sales over the previous year. Sale of over 19,000 tonnes of gas was achieved through the

offer of ‘LNG at the Doorstep’ facility for customers located away from gas pipelines.

IOCL is also looking to book capacity and equity participation in various upcoming LNG projects in

the country, including in Gujarat and Odisha. on-petrochemical-

gas-marketing- portfolios-for- gro.html

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