HPCL net trebles on inventory gains
New Delhi: Hindustan Petroleum Corp Ltd (HPCL) on Wednesday reported trebling of net profit in December quarter as inventory gains made up for lower refinery margins.
Net profit in October-December at Rs 747 crore was higher than net profit of Rs 248 crore in the same period a year back, HPCL Chairman and Managing Director Mukesk K Surana told reporters here.
"In Q3 of the last fiscal we had an inventory loss of Rs 3,465 crore. As compared, we made an inventory gain of Rs 343 crore," he said, adding the inventory gains were partly offset by lower exchange gains.
HPCL had a foreign exchange gain of Rs 82 crore in the December quarter as compared to a forex gain of Rs 557 crore a year back, he said.
A company records inventory gain when it buys raw material (crude oil) at a particular price but by the time it is able to process and convert it into fuel, international oil prices have gone up. Since fuel prices are benchmarked to international rates, inventory gains are booked. Inventory losses are booked when the reverse happens. The company earned $1.79 on turning every barrel of crude oil into fuel in Q3 as compared to a gross refining margin of $3.72 per barrel a year back.
"The lower GRM is primarily due to lower cracks of fuel oil and LPG and planned shutdown of secondary units at Visakh refinery," he said.
Sales was also lower at Rs 74,288 crore in October-December as against turnover of Rs 76,884 crore.