Themes : Retailing
Period : 1995-2001
Organization : BPCL, IOC
Pub Date : 2001
Countries : India
Industry : Energy & Utilities
BPCL's history dates back to 1951, when the Government of India entered into an agreement with the UK based Burmah Oil Company and Shell Petroleum Co. (Burmah-Shell) for establishing an oil refinery in Bombay. In 1952, this agreement led to the incorporation of Burmah Shell Oil Refineries Ltd. In January 1955, the refinery at Bombay went on stream, and in 1962, the refinery started processing crude oil from Ankleshwar in Gujarat.
In December 1975, following the passing of 'The Burmah-Shell (Acquisition of Undertaking in India) Bill,' the Government of India signed an agreement with Burmah-Shell. Subsequently, the government took over the operations of the company and changed its name to Bharat Refineries. Initially, the company sold only kerosene, but later it set up service stations to sell petrol as well. Bharat Refineries became the first Indian company to introduce LPG for domestic cooking purposes. |
In 1993, BPCL tied up with its erstwhile partner Shell, to form Bharat Shell Ltd. (BSL), with the latter having a 51% stake. In 1994, BSL launched lubricants under the Shell brand. These were marketed by BPCL as well as BSL. By the late 1990s, BPCL had emerged as India's second largest oil company in terms of market share.
In April 1994, 3.8% of BPCL's equity was disinvested in favor of its employees. In 1998-99, the Government decided to further divest 26% of its stake in BPCL. The Government identified BPCL as one of the nine 'Navratnas'.3 This move gave BPCL greater freedom to develop employee policies. It also enabled the company to take decisions regarding capital project expenditures without government interference. In 1999, BPCL acquired a 32% stake in Indo British Petroleum (IBP).
BPCL's Mumbai refinery consistently operated at over 120% of its 6.9 million metric tonnes per annum (mtpa) installed capacity. It had the ability to process a wide variety of crude, and its proximity to the Bombay High oil field enabled it to meet most of its crude demand domestically (only 15% was imported). To make up for its limited refining capacity, BCPL formed a strategic alliance with Chennai Petroleum Corp (which was later taken over by IOC) to sell the products produced in the latter's 6.5 m mtpa Manali refinery.
Also, the government transferred its entire shareholding in Kochi Refineries (KRL) (capacity 7.5 mtpa) to BPCL. BPCL also acquired IBP's 19% stake in Numaligarh Refineries (NRL) (capacity 3 mtpa) in West Bengal. These acquisitions, and the 9 mtpa refinery being set up at Bina in Madhya Pradesh, were expected to address the limited refining capacity problem in the future. By mid-2001, BPCL's nation-wide retail network comprised 4,500 outlets, 60% of which were company-owned or leased - the highest percentage among the oil PSUs.
3] Public sector companies that were deemed to have competitive advantage and the potential to become global giants. Besides BPCL, these included MTNL, IPCL, IOC, BHEL, SAIL, VSNL, GAIL, and MMTC.