Top 5 Companies With Highest Raw Material Expenses As A % of Sales

In this article, we take a look at companies that have posted the highest raw material expenses as a percentage of sales in FY13. To arrive at the top 5 companies, we have taken into consideration only those companies that have a market capitalisation and equity capital of more than Rs 100 crore.

Chennai Petroleum Corporation: Chennai Petroleum Corporation (CPCL), formerly known as Madras Refineries (MRL) was formed in 1965 as a joint venture between the Government of India (GoI), AMOCO and National Iranian Oil Company (NIOC). As a part of the restructuring steps taken up by the Government of India, IndianOil acquired equity from GoI in 2000-01. CPCL has two refineries with a combined refining capacity of 11.5 Million Tonnes Per Annum (MMTPA).

The company’s raw material expenses as a percentage of sales stood at 99.04% as of FY13, the highest as per our criteria. Its market capitalisation is at Rs 828.69 crore.

Mangalore Refinery and Petrochemicals: Mangalore Refinery and Petrochemicals (MRPL), a Schedule ‘A’ CPSE and a subsidiary of ONGC, is a state-of-the-art grassroot refinery located north of Mangalore city in the Dakshin Kannada region. The refinery has a versatile design, with a high degree of automation and the flexibility to process crudes of various APIs. MRPL has a design capacity to process 15 million metric tonnes per annum and has two hydrocrackers producing premium diesel (high cetane). It also has 2 CCRs producing unleaded petrol of high octane.

The company’s raw material expenses stands at Rs 64360 crore in FY13 as against a topline of Rs 65696 crore. The raw material expenses as a percentage of sales stands at 97.97%.

Petronet LNG: Petronet LNG is at the forefront of India's national drive to ensure energy security for the country in the years to come. Formed as a JV by the Government of India to import LNG and set up terminals in the country, it involves India's leading oil and natural gas industry players. Its promoters are GAIL (India), Oil & Natural Gas Corporation (ONGC), Indian Oil Corporation (IOCL) and Bharat Petroleum Corporation.

The company consumed raw materials worth Rs 29323 crore during FY13 and the raw material expenses as a percentage of sales stands at 93.19%.

Essar Oil: Essar has a global portfolio of onshore and offshore oil and gas blocks, with about 35000 sq. km. available for exploration. It has over 750000 barrels per stream day (bpsd) of global crude-refining capacity (Vadinar+Stanlow+Kenya). In the sphere of marketing, the company operates a network of over 1400 retail outlets across India, with another 200 under various stages of commissioning.

The raw material expenses for the company in FY13 were at Rs 82023 crore, which makes up 92.60% of its topline.

Bharat Petroleum Corporation: Bharat Petroleum Corporation refines crude oil and markets petroleum products, and explores and produces hydrocarbons in India. The company has interests in 25 exploration blocks, including 11 located in India, 10 in Brazil and 1 each in Mozambique, Indonesia, Australia and East Timor. The company was formerly known as Bharat Refineries and changed its name to Bharat Petroleum Corporation in August 1977.

The raw material expenses for the company in FY13 were at Rs 222062 crore as against a topline of Rs 240115 crore, which translates into 92.48% of its total sales.