The new refining facility is expected to operate at 65 per cent capacity for fiscal 2000 and is likely to contribute around 10 per cent to the company's turnover and net profit. In 1997-98, IOC processed 27.5 million tonnes of crude oil from its 6 refineries having a combined capacity of 24.5 million tpa.

IOC's small refineries located in eastern India (Barauni, Guwahati and Digboi) have uneconomic capacity, lower capacity utilization and higher cost. However IOC's Gujarat and Mathura refineries are efficientin terms of cost and have a superior product mix. With commissioning of Panipat refinery, the company's refining yield should improve. For fiscal 1999, the company is likely to report a turnover of Rs 31,000 crore and a net profit of Rs 2318 crore.

With the new refinery going on stream, analysts say the company is likely to witness a 30 per cent growth in earnings per share(EPS) in fiscal 2000. The EPS is likely to jump to Rs 73.4 in fiscal 2000 as against Rs 43.1 reported in fiscal 1998.

IOC plans another 6 million tonnes grass root refinery at Paradip in Orissa. The ompany also is expanding its Koyali refinery by 3 million tonnes and the Barauni refinery by 6 million tonnes. Plans are afoot to expand its Gujarat refinery. IOC has set up 2 joint ventures -- Indo Mobile Pvt Ltd and Avoil India -- and is planning another venture with Kuwait Petroleum Corporation.

Other than refining, IOC has a dominant share in marketing and distribution infrastructure. It owns over 50 per cent of the terminals, 80 percent of aviation fuel stations, 40 per cent of depots and outlets and nearly all the pipelines. Relative to its overall network size, IOC has lesser coverage of retail outlets.

The Centre has announced a 4-year plan to deregulate the sector beginning fiscal 1999. While retention pricing for refineries has been abolished w.e.f. April 1998, controls on 5 products which account for over 70 per cent of volumes, continues. On controlled products, refineries will get adjusted import parity prices. IOC's margins will improve post-deregulation as it has a low cost of production. Marketing & distribution network will be under administered price mechanism (APM) till fiscal 2002.

The actual rise in earnings, however, will depend on the adjustment factor and tariff structure. In fiscal 2003, IOC will see another quantum jump in earnings with the decontrol of the marketing/ distribution network.