Hindustan Petroleum Q4 net profit jumps to Rs 3,018 cr on inventory gains

Hindustan Petroleum Corporation Ltd (HPCL) on Thursday reported its March quarter net profit soaring many folds to Rs 3,018 crore on the back of inventory gains and rise in refining margins.

The company had a net profit of Rs 27 crore in January-March 2020.

"Enhanced profitability was a result of robust operational performance, improvement in refinery margins helped by inventory gains and favourable exchange rate variations," HPCL Chairman and Managing Director M K Surana told reporters.

The company, which runs refineries at Mumbai and Visakhapatnam, earned USD 8.11 on turning every barrel of crude oil into fuel in January-March period. This is compared with a negative gross refining margin (GRM) of USD 1.23 per barrel.

Inventory gains are booked when raw material (crude) prices rise by the time a company processes oil into fuel. Losses are booked when the reverse happens.

Surana said the company had an inventory gain of Rs 4,608 crore in the fourth quarter of 2020-21 as compared to an inventory loss of Rs 4,113 crore in the same period a year back.

Also, the company booked Rs 141 crore in foreign exchange gains during January-March 2020-21 as compared to a forex loss of Rs 975 crore last year.

Without the inventory gains, GRM was USD 3.5 per barrel.

For the full 2020-21 fiscal year (April to March), HPCL posted a record net profit of Rs 10,664 crore as compared to Rs 2,637 crore for the previous year.

"Outbreak of a pandemic led to significant demand contraction in the first quarter of the year which was followed by a smart recovery in the latter part of the year leading to an aggregate demand contraction for the petroleum products of about 9 per cent in 2020-21 over the previous year," he said.

The already volatile crude oil market witnessed a sharp price fluctuations on the back of demand contraction, inventory overhang and the efforts by the major oil producers to regulate the supplies.

Gross sales for 2020-21 was Rs 2,69,243 crore as compared Rs 2,86,250 crore during the previous year.

The combined GRM for HPCL Refineries for the last fiscal year works out to USD 3.86 per barrel compared to USD 1.02 in the previous year.

For the year 2020-21, HPCL has proposed a final dividend of Rs 22.75 per share.

During 2020-21, HPCL refineries at Mumbai and Visakhapatnam achieved a combined refining thruput of 16.42 million tonne with capacity utilization of 104 per cent.

"Effective crude sourcing plans, optimizing day-to-day crude run rate, efficient logistics management and regulating product procurements from other sources enabled HPCL to achieve more than 100 per cent capacity utilization in refineries in spite of overall demand contraction," he said.

During the year, HPCL achieved a sales volume of 36.59 million tonne compared to the previous year's sales of 39.64 million tonne.

"HPCL registered market share gain for transport fuels and recorded the least de-growth of 6.6 per cent in domestic sales among the industry, industry de-growth for 2020-21 being 8.4 per cent compared to the previous year," he said.