OC’s 180,000 crore capex-I: The bull run will continue for five more years?

Galvanized by higher profits, Indian Oil Corporation plans to fund its massive Rs 180,000 crore capex over seven years through internal accruals.
Earnings are likely to be strong going ahead, now that the Paradip refinery has been fully commissioned. Higher complexity of the refinery will provide a better core GRM (of around $ 12/bbl) which will be at a premium to the Singapore benchmark.
Current core GRM of IOC is at a reasonable 7.7/bbl though the eventual figure was dragged down by inventory loss.
Given the galloping growth in demand for POL products in India, IOC will continue to invest heavily in new refining capacity.
The capex run is likely to continue for the next five years or perhaps even more. Eventually however, the advent of disruptive technology will dramatically changes its business model.

Rs 15,000 crore of fresh capex sanctioned

IOC intends to add 20 MMTPA of refining capacity over the next five years, pushing up installed capacity to 100 MMTPA.
This is over and above the 60 MMTPA mega refinery that it is partnering with BPCL and HPCL to build.
Capital approval was provided last week to an increase in capacity of one of its refineries by more than 4 MMTPA at a cost of Rs 15,000 crore.
IOC’s capex binge is likely to keep EPC contractors as well as equipment and service suppliers busy for some time to come

The advent of the electric car

Oil marketing companies fear the advent of the electric car as it will dramatically disrupt their business model.
There are a handful of electric cars in India and they are still behind models launched by the likes of Tesla in the US
Nevertheless, the latest Indian model has the following features;
Zero tailpipe emission
Telematics captures 190+ vehicle performance parameters
0-100% charge in 8 hours
Running cost Rs 1.15/km at an electricity cost of Rs 7/kwh
Range is 110 km on full charge
Low maintenance due to fewer moving parts
Long life maintenance free lithium ion batteries



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