The Hindu Business Line : HPCL may resort to rationing auto fuels; Q4 net profit dips 30%

New Delhi, May 29 Hindustan Petroleum Corporation Ltd (HPCL) may have to resort to rationing auto fuel supplies if there is a delay in getting a relief package to cut revenue losses suffered by the oil marketing companies (OMCs). “As of now we are not restricting the supplies of the products, but if the current situation continues we may be forced to do it. We can sustain operations up to two-and-a-half months in the current scenario,” Mr Arun Balakrishnan, Chairman and Managing Director, said.

The company may also be compelled to review its product imports situations and new projects. Speaking to newspersons, he said, “We have deferred capital expenditure on new projects due to liquidity crunch but investment in the proposed refinery at Bhatinda will continue.”

Under-recoveries

For the year 2007-08, the net under-recoveries suffered by the company stood at Rs 3,119 crore (Rs 772 crore in 2006-07) after factoring in the oil bonds and discounts offered by the upstream companies. For the year under review, the company suffered a revenue loss of Rs 1,865 crore on petrol, Rs 7,053 crore on diesel, Rs 3,588 crore on kerosene and Rs 3,724 crore on cooking gas taking the total under recoveries to Rs 16,231 crore. As part of the Government bailout package, HPCL received discounts worth Rs 5,409 crore from upstream companies and oil bonds worth Rs 7,703 crore.

HPCL’s net profit for the fourth quarter of 2007-08 dipped 30 per cent at Rs 384.51 crore compared with same period last year (Rs 549.54 crore). The company was able to post profit in the fourth quarter due to oil bonds and reversal of taxes. However, for the full year the company reported a 28 per cent fall in its profit on higher interest cost and under-recoveries. The profit after tax for 2007-08 was Rs 1,135 crore (Rs 1,571 crore). The turnover increased by 13.5 per cent to Rs 1, 03,837 crore (Rs 91,448 crore).