HPCL profit jumps 86% on higher refining margins

State-owned Hindustan Petroleum Corp Ltd (HPCL) today reported 86 per cent jump in first-quarter net profit on higher refining margins.

Net profit of Rs 1,719 crore, or Rs 11.28 per share, in the April-June period of the current fiscal was 86 per cent higher than Rs 925 crore clocked a year ago, HPCL Chairman and Managing Director Mukesh K Surana told reporters here.

"The profit was higher because of higher refining margins which had a component of inventory gains. It was aided by higher refinery throughput and higher sales," he said.

The firm earned USD 7.15 on turning every barrel of crude oil into fuel as compared to USD 5.86 per barrel gross refining margin a year ago. This included an inventory gain of USD 3.43 per barrel as compared to an inventory loss of USD 2.86 in the same period of previous fiscal.

Inventory gain occurs when a company buys crude oil at a particular rate but by the time it is able to transport it to its refinery, process it and send out fuel to sale outlets, prices would have gone up. Since retail price is benchmarked at prevailing international price, an inventory gain is accounted for. In case of reverse, an inventory loss is booked.

In absolute terms, the inventory gain was Rs 1,900 crore in Q1, 2018-19 (as against loss of Rs 1,575 crore a year ago), he said.

Revenue rose to Rs 72,923 crore in Q1 from Rs 59,891 crore a year back.

"During April-June, though crude prices have increased significantly (from USD 49.8 per barrel to USD 73) leading to inventory gains which improved gross refinery margins, a part of it was offset by lower cracks especially in LPG and bitumen and higher value of fuel in refineries," Surana said.

He added that but for lower cracks (difference between crude oil price and product price) and higher oil prices, margins should have been higher by USD 5 per barrel.

HPCL's refineries at Mumbai and Visakh processed 4.52 million tonnes of crude during April-June, 2018 as against 4.49 million tonnes during April-June, 2017.

Also, during the period, the company achieved the highest ever quarterly domestic sales volume of 9.63 million tonnes with a growth of 5 per cent.

Surana said HPCL commissioned 65 new petrol pumps in the quarter to take the total retail outlets to 15,127. Also, 141 new LPG distributorships were commissioned, taking them to 4,990 as of June 2018.

"For the year 2018-19, HPCL has planned to invest over Rs 8,400 crore in various projects across refineries and petrochemicals, marketing, pipelines and natural gas," he said.