The three state-owned oil refiners have incurred losses of Rs 12,891 crore in the second quarter even as their sales increased by 47 per cent during the period.
This is because these firms – Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) – sold fuels at below production costs and incurred inventory losses due to higher crude oil prices. The rupee’s depreciation against the US dollar also contributed to the loss.
The three companies had made a total profit of Rs 5,688 crore in the corresponding quarter a year ago.
Sales of the three companies together rose 46.57 per cent to Rs 147,668.84 crore from Rs 100,744.25 crore a year ago.
“Weak refinery margins pushed these three firms deep into the red,” said a Mumbai-based analyst with a brokerage firm. “The refinery business was bailing out these companies before, but this quarter even that business is under severe pressure,” he added.
IOC today reported its highest-ever loss since the shares were publicly traded in FY01. It is the third time the company is posting a quarterly loss. Losses for the September quarter amounted to Rs 7,047 crore after it lost Rs 4,950 crore from its fuel retail business. The country’s largest oil marketing company said it lost Rs 4,600 crore because of crude oil prices declining by 55 per cent in the last three months.
HPCL, which supplies around 25 per cent of the country’s fuel, also reported a loss of Rs 3,218.92 crore during the quarter. BPCL had reported Rs 2,625 crore loss on Thursday.
The under-realisation of the three companies during the quarter was Rs 44,063 crore, 46.65 per cent of which was made good by the government through payment of oil bonds.
The oil companies also made losses as the rupee’s value depreciated against the dollar. These companies have foreign currency loans and also buy crude oil in dollars. IOC today said it had lost Rs 1,100 crore during the quarter, while BPCL lost Rs 700 crore.
The refinery margins of these three companies also fell drastically with IOC, which controls around 40 per cent of the country’s refining capacity, making negative margins of around $4 per barrel for the first time, compared with $5.91 per barrel in the corresponding quarter last year. BPCL’s refinery margins were $3.1 per barrel compared with $3.5 per barrel a year ago.
The interest paid by these companies on their borrowings of over Rs 110,000 crore as on September 30 also rose over three times to Rs 2,052.76 crore as the firms did not have any bonds and borrowed more in order to meet their daily funding requirement.