State-run Hindustan Petroleum Corporation Ltd (HPCL) has posted a 37 per cent fall in net profit for the second quarter of the financial year to Rs 10.92 billion, owing to a rise in crude oil prices and exchange rate fluctuations.
During the July to September quarter of the previous financial year, the net profit of the company was seen at Rs 17.35 billion. The foreign exchange loss for the period under review was Rs 8.87 billion, compared to Rs 200 million gain during the same time last year.
HPCL Chairman and Managing Director M K Surana said that the merger between Mangalore Refineries and Petrochemicals (MRPL) and Hindustan Petroleum Corporation Ltd (HPCL) will happen only in the next financial year.
After the acquisition of majority stake in HPCL by Oil and Natural Gas Corporation (ONGC), it was expected that ONGC may look at further synergy in business by merging the two subsidiaries. "The three boards will be taking up the plan soon and it will take six more months for the merger to be completed," he said.
For the quarter under review, the company has registered a rise in gross sales to Rs 730.65 billion, up 35 per cent compared to Rs 541.43 billion during the July to September quarter in 2017. Interestingly, there was a sharp rise in average crude oil prices from $52.7 a barrel during the same time last year to $72.46 a barrel this year. The combined gross refining margin (GRM) for the second quarter stood at $4.81 a barrel compared to $7.61 a barrel in the corresponding previous quarter.
During the July-September quarter, the domestic sales of petroleum products increased to 8.83 million tonnes (mt), registering a growth of 4.8 per cent over the previous year. The sales of petrol increased by 5.9 per cent, diesel by 2.4 per cent, aviation turbine fuel by 27.3 per cent and cooking gas by 4.5 per cent.
The company has decided to shut down all its refineries for a short duration to upgrade to BS-VI fuel norms. It posted an inventory gain of Rs 12.76 billion during Q2 of this year, compared to Rs 7.92 billion during the corresponding period last year.
Surana added that the company is absorbing Rs 1 a litre on the prices of petrol and diesel since October 5, the impact of which will be visible during the third quarter.
In an effort to expand its non-fuel portfolio, HPCL has now forayed into packaged drinking water business and has launched its brand Reminero in Hyderabad. It has already sold 20,000 bottles at a maximum retail price of Rs 20 per bottle. HPCL is looking to expand this to other markets as well.