HPCL net hit by decline in crude prices

HPCL net hit by decline in crude prices

New Delhi, Aug. 4: Inventory losses pulled down HPCL's net profit 56 per cent to Rs 925 crore in the first quarter of the current financial year.

"We had an inventory loss of Rs 1,595 crore in the first quarter of the current fiscal compared with an inventory gain of Rs 1,935 crore in the corresponding period of the previous year," HPCL chairman and managing director M.K. Surana told reporters here.

The net profit of the state-owned company in the April-June quarter came in at Rs 925 crore, lower than Rs 2,098 crore in the year-ago period.

Revenues, however, soared to Rs 59,891 crore from Rs 51,600 crore in the first quarter of the previous year.

The company earned $5.86 on turning every barrel of crude oil into fuel during the April-June quarter of 2017-18 compared with a gross refining margin of $6.83 per barrel in the same period of 2016-17.

Inventory loss occurs when oil prices fall after procurement and before marketing. The price of the Indian basket of crude dropped $4.56 per barrel during April-June against an increase of $10.89 a barrel in the same period of 2016-17.

On the upcoming acquisition of a 51.1 per cent government stake by ONGC, Surana said the deal would bring synergy to HPCL's petrochemical business.

"We are yet to get a first-hand information from the government in this regard and we have informed the stock exchanges that. However, the process has started as valuation advisers are working on it," he added.

The company was not going slow on its investment and expansion plans, Surana said. "For financial year 2017-18, we are investing about Rs 7,100 crore in various projects, including refineries, marketing and pipelines," he added.

HPCL's Mumbai and Vizag refineries processed 4.49 million tonnes of crude in the quarter, almost unchanged from the previous year.

"Both the refineries are supplying 100 per cent BS-IV grade petrol and diesel from April 1, 2017," he said.

HPCL recorded its highest sale of 9.20 million tonnes of fuel in the first quarter, 3.5 per cent higher than 8.89 million tonnes a year ago.

"The market sales growth of 3.5 per cent is higher than industry (PSU and private) growth of 3.4 per cent. In the PSU category, HPCL has gained a market share of 0.20 per cent," Surana said, adding that petrol sales rose 9 per cent while diesel was up 2.5 per cent.