State-run refiner Bharat Petroleum Corporation (BPCL) reported consolidated net profit at Rs 2,589.52 crore, jumping 58 per cent year-on-year on the back of lower expenses, including material and finance costs. The Covid impact lingers with refining throughput down and a 12 per cent dip in revenue.
The company expects year-on-year demand growth of petroleum products, like diesel and petrol, in the March quarter.
BPCL’s 58 per cent rise in net profit was helped by a 16 per cent drop in total expenses. Finance cost for the company was down 86 per cent, while the cost of material declined 45 per cent, reflecting the lower cost of crude oil. Borrowings as of September was at Rs 27,850 crore as against Rs. 41,875 crore as of March. Revenue from operations for the quarter, however, was at Rs 66,331.22 crore, down 12 per cent.
Inventory gains for the company were at Rs 2503 crore, of which Rs 1303 crore was inventory gains seen in the refining segment. This compared to an overall inventory loss of Rs 26 crore reported for the same period a year ago.
Gross refining margins (GRM) for the company in the quarter under review increased to $5.8 per barrel, higher from $3.38 per barrel a year ago. “We adopted a strategy to buy (cheaper) crude oil in April and May, and that has given a boost to our refining margins,” said N Vijayagopal, director of finance for the company. Average gross refining margins (GRM) for the half-year April to September 2020 was flat at 3.9 per barrel.
BPCL’s refinery throughput is yet to see a full recovery, as the company restricted production to meet only local demand.
Refining throughput remained lower at 7.12 million metric tonnes (MMT) for the quarter, down from 9.25 MMT a year ago. As of October, BPCL’s refinery utilisation was at 86 percent. “We have adopted a strategy to not export diesel and avoid the import of petrol. We are running our refinery only to meet our local demand, we also increased petrol production at the Kochi refinery earlier,” Vijaygopal said.
The half-year sales for petrol was down 23.19 per cent, diesel sales declined 24.91 percent and aviation tribune fuel (ATF) was down 72.65 per cent. The company said sales in October have recovered to pre covid levels, with petrol and diesel registering a growth of 4-5 per cent in sales volume in the current month over the corresponding period last year. “I expect a year on year growth in demand in the fourth quarter,” Vijaygopal said.
On the company’s capital expenditure for the year, Vijaygopal added, so far Rs 2500 crore has been spent and BPCL will end the financial year with Rs 8000 crore or more as capital expenditure.