Commodities News

Will maximise refining margins irrespective of crude price trend: Nayara Energy CFO

Nayara, which owns the country’s second largest single-site oil refinery, will focus on refining margins, irrespective of any volatility in global crude oil prices.

Nayara Energy, a private refinery, is planning to expand its business in India with a target to increase its retail fuel stations by 50% from around 6,400 now by 2030, by opening new outlets along national highways and in rural areas. The company, which posted a net profit of Rs 9,592 crore on operational revenue of Rs 1.37 trillion, in FY23, also aims to be have a larger share in India’s downstream petroleum value chain by diversifying its portfolio in the petrochemical industry, Chief Financial Officer, Rajani Kesari told Arunima Bharadwaj in an interview. Nayara, which owns the country’s second largest single-site oil refinery, will focus on refining margins, irrespective of any volatility in global crude oil prices, she says.

Edited excerpts:

After having moderated in the last quarter, oil prices seem to look up again. How would the volatility in prices impact the company’s operations and margins?

The focus of the business is to maximize refining margins, irrespective of the trends in oil prices. We use hedging strategies to reduce the impact of market volatility in crude oil and product prices. Despite global headwinds, relentless management efforts towards business improvements enabled us to deliver a strong performance in FY23.

Does the company plan to revise auto fuel prices anytime soon?

Fuel prices depend on multiple factors including crude oil prices, taxation, transportation, and other costs. We analyse and adapt auto fuel prices as per prevailing market prices.

What are your investment plans across segments for the next financial year and beyond?

We are gearing up for an ambitious expansion in the next financial year (2024-2025) with significant investments across various segments. Our primary focus is on the polypropylene unit project in Vadinar, Gujarat. The first phase of the project is nearing completion and is scheduled to be commissioned in 2024. The total investment in the project is about $750 million. This is in line with the plan to diversify product portfolio.

Do you plan to expand the retail network?

At present, we are the leading private fuel station network in India, with over 6,400 operational petrol pumps strategically positioned nationwide. Furthermore, there are a significant number of petrol pumps in various commissioning stages.

In 2024, our goal is to make our retail network more extensive by establishing a more pumps along the national and state highways and in rural areas.

Domestic sales (of refinery products) have been the mainstay for your business. How has this segment performed in the current year?

We have been witnessing satisfactory year-on-year growth across all domestic sales channels, showcasing the strength of our operations and market presence. On the retail front, we are focused on fortifying our retail network with plans to expand by over 50% by 2030. We aim to contribute to the country’s plan to meet its rising energy demands and solidify our position as a premier downstream company.

How is the exports segment doing?

As a major downstream player, delivering around 8% of India’s refining output, we are primarily focused on catering to the domestic market through institutional business, sales to other oil companies and through our own retail chain. A total of 6.21 million tonnes of petroleum products were exported so far in the current fiscal, including jet fuel, gasoil, and gasoline. The company’s primary export markets are Africa, Southeast Asia, and the Middle East.

How do you plan to hedge your business against the volatility in the global oil market?

To navigate the volatile oil market, we leverage our operational resilience amidst fluctuating prices. Moreover, we strategically utilized diverse hedging strategies, adapting them according to prevailing market sentiments to ensure our business’s resilience and ensuring long-term stability.

You have recently signed an MoU with NTPC on green hydrogen. How do you plan to expand the portfolio in the renewable energy space?

The program is in line with our commitment of decreasing carbon footprints and adds considerably to the country’s energy transition goals. We are exploring the viability of green hydrogen for internal consumption by harnessing cutting-edge technologies.

What are the other steps being taken to reduce the carbon footprint?

During the year, we made good progress in our endeavor to establish a 10 MW solar plant at its Vadinar refinery in Gujarat, which will help us mitigate carbon emissions annually. Additionally, we have scheduled the commissioning of a 500 kW captive solar power plant at our newly established rail-fed fuel depot in Pali, Rajasthan. This strategic move will contribute to a further reduction in carbon emissions every year. We are also exploring pilot projects for green hydrogen to meet our significant hydrogen requirements, in line with the government’s Green Hydrogen Mission.

Leave a Reply

Your email address will not be published. Required fields are marked *