The oil refining and marketing company attributed the fall in profit to inventory losses, stemming from fluctuations in global oil prices and foreign exchange valuations.
Hindustan Petroleum Corporation (HPCL) reported a net profit of Rs 26.8 crore on a standalone basis for the three months ended March 31, recording a 99.1% drop from the same period a year ago. The oil refining and marketing company attributed the fall in profit to inventory losses, stemming from fluctuations in global oil prices and foreign exchange valuations.
As retail prices of petroleum products are mapped with international rates, a gradual drop of global oil prices in Q4FY20 meant that by the time HPCL sold its products after processing crude, retail rates had decreased. The inventory loss in the quarter was `4,113 crore against gains of `1,224 crore in the corresponding period a year ago, said HPCL chairman Mukesh Kumar Surana.
The company lost Rs 975 crore in the quarter from foreign currency transactions against an income of Rs 256 crore on this front in the corresponding quarter a year ago. HPCL accounted a loss of Rs 1,002 crore as ‘exceptional item’ in the quarter to reflect the sudden crude price and demand anomalies triggered by the coronavirus. The company sold 9.25 million tonne (mt) of petroleum products in the quarter, marking a drop of 7.8% y-o-y, mainly due to the lockdown to contain the outspread of the coronavirus.
For FY20, HPCL’s profit fell 56.3% y-o-y to Rs 2,637.3 crore. The company received lower returns from its refinery operations in the fiscal, earning only $1.02 from processing every barrel of refined products in the quarter, 79.6% lower than FY19. The refinery margins does not include the inventory losses.
After adding 1,194 new retail outlets in the fiscal, HPCL’s total network size amounts to 16,476. HPCL’s total LPG distributorships now stands at to 6,110. HPCL said that works to upgrade its Visakh and Mumbai refineries are in progress and the 9-MMTPA greenfield refinery-cum-petrochemical complex project of its unit HPCL Rajasthan Refinery is under execution, though construction activities had temporarily stalled due to covid disruptions.