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HPCL: Pros and cons

Mar 17, 2008

We shall study the pros and cons of HPCL from this article onwards. We begin with a look at some of the important factors working in favour of the company. Pros:
Increased volumes (thruput): HPCL has achieved 128% capacity utilisation to process 16.7 million metric tonnes (MMT) of crude in FY07 on the back of low cost de-bottlenecking, completion of a major maintenance programme, initiatives taken towards improving unit performance, reduction in instances of downtime and upgradation of equipment. Moreover, it plans to set up a 9 MMTPA refinery at Bathinda, Punjab.

Product-mix management: HPCL is configuring its product slate towards high demand categories. With massive road construction projects and the scorching growth in the aviation sector, the company has targeted bitumen and aviation turbine fuel (ATF) as high growth products.

Both the refineries at Mumbai and Visakh have also brought down the fuel and loss levels to improve the profitability of the operations.

Value added retail outlets: The company believes that customers demand several non-fuel offerings at fuel outlets. Hence it plans to sweat the retail outlet real estate through various formats.

Its various initiatives in this direction include: creation of driver brands with premium fuels like power, turbojet; loyalty program through co-branded credit cards; customer service emphasizing on cleanliness and courtesy at club HP junction and hamara pump outlets; and partnering with brands like Baskin Robbins, Caf coffee day, Exide, Axis bank, ICICI bank etc.

HPCL is also focusing on rural development with low cost-high revenue outlets growing from 401 outlets to a projected 1,425 by FY08. It has over 800 automated outlets with a target of reaching 2,000 by September 08.

We shall continue with our profile of HPCLs pros and cons in the next article.

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