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HPCL Q2 profit falls 4% to Rs 1,052 crore; GRM falls to $2.83 from $4.81

Total income of the company declined 9.40 per cent to Rs 66,850.89 crore against Rs 73,789.50 crore.

, ET Bureau|
Updated: Nov 07, 2019, 07.54 PM IST
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Hindustan Petroleum Corporation Ltd (HPCL) posted a profit of Rs 1,052 crore for the quarter to September, almost double that of Rs 564 crore profit reported by its much larger peer, Indian Oil Corporation (IOC), a variance in performance mainly attributable to the way the two companies managed their inventories.

HPCL’s quarterly profit fell 3.7% from a year ago while that of IOC fell 83%. HPCL’s sales dropped 9.5% to Rs 66,165 crore, mainly because of lower product prices during the quarter.

HPCL made an inventory gain of Rs 53 crore in July-September, as against a gain of Rs 1,276 crore a year ago. By comparison, IOC, the country’s largest refiner and fossil fuel retailer, reported an inventory loss of Rs 1,807 crore for the quarter, as against an inventory gain of Rs 2,895 crore a year ago.

“We are consciously working on our inventory system and even the way we are contracting crude as far as pricing is concerned. We have been having a conscious call from time to time to ensure that whether we are able to align our product pricing with crude prices,” said HPCL chairman MK Surana.

A good transmission and distribution infrastructure, which ensures easy access to customers, also allows the company to keep low inventory, he said. HPCL maintains a crude inventory of about 15 days, which includes supplies in ship.

HPCL’s gross refining margin (GRM) for the quarter fell to $2.83 per barrel from $4.81 per barrel a year ago. The GRM, after adjusting for inventory gains, is $2.55/barrel against $2.69 in the year-ago period, Surana said, while attributing the decline in margin to weak cracks in petrol and liquefied petroleum gas (LPG).

The company’s profit was also helped by lower forex loss – Rs 122 crore – during the quarter compared to Rs 887 crore in the year-ago period.

HPCL’s refineries processed 4.56 million tonnes of crude oil in the quarter, lower than 4.76 million tonnes in the year-ago period, mainly due to planned shutdown at Visakh refinery in September.

The company said it was still evaluating if and when it could adopt new corporate tax rates.

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