HPCL profit slips 37% on lower refining margins
New Delhi: Hindustan Petroleum Corp Ltd (HPCL) Thursday reported a 37 per cent drop in its second quarter net profit on the back of lower refining margins and foreign exchange losses.
Net profit in July-September fell to Rs 1,092 crore from Rs 1,735 crore in the corresponding period of previous financial year, HPCL Chairman and Managing Director Mukesh K Surana told reporters here.
"The profit was impacted on account of increase in crude prices and consequent increase in the fuel and loss component besides exchange rate fluctuations," he said.
The company earned USD 4.81 on turning every barrel of crude oil into fuel in the second quarter, down from USD 7.61 per barrel gross refining margin in the year ago period.
Also, the company had a foreign exchange loss of Rs 887 crore as compared to a gain of Rs 20 crore in July-September 2017, he said.
But, these were balanced by inventory gain of Rs 1,276 crore in Q2 as opposed to a gain of Rs 792 crore last year.
Inventory gain arise when a refiner buys crude oil at given price but by the time it is able to process it and take the fuel to the market, rates would have gone up. And since the pump rates are benchmarked to prevailing international prices, the fuel gets a higher price, resulting in inventory gain. Inventory loss arises when reverse of this happens.
Because of the rise in oil prices, HPCL saw turnover zoom to Rs 73,065 crore as compared to Rs 54,143 crore for the period July-September, 2017.
Surana said the domestic sales of petroleum products increased to 8.83 million tonnes registering a growth of 4.8 per cent as against industry average of 4.3 per cent.