The Hindu Business Line : Refining margin comes to Numaligarh’s rescue

Kolkata, Aug. 7 Notwithstanding unprecedented losses in the retailing front, Numaligarh Refinery Ltd may manage to remain in the black, riding on high refining margin in the first quarter.

The BPCL subsidiary has lost approximately 100 crore on retailing during the April-June 2008 period, almost the same amount as it lost during the entire 2007-08. NRL posted a net profit of Rs 47 crore on a turnover of Rs 1,729 crore during April-June 2007.

The company entered fuel retailing following the deregulation of the sector a few years back. It is not considered as a public sector oil marketing company and is outside the purview of the fiscal compensation package granted by the Centre through oil bonds and upstream sharing.

The Assam Accord (1985) company operates approximately 80 outlets in the country, bulk of which are in the North Eastern states of Assam, Meghalaya, Nagaland and Manipur. This apart, NRL also has outlets in West Bengal, Bihar, Orissa, Uttar Pradesh, Punjab, Andhra Pradesh, Rajasthan, Haryana and Delhi.

Loss count

Company sources told Business Line that NRL has been losing Rs 1 crore a day on fuel sales so far this fiscal. Losses would have been higher had the company not taken a series of preventive measures.

“Thankfully the refining margin — the difference between the international crude and product prices — came to our rescue, without which it could have been difficult to remain in the black during the first quarter,” a source said.

Meanwhile, NRL has taken a fresh attempt to export diesel to Bangladesh. Though exports are not financially beneficial for the company (due to non-availability excise benefits applicable to refiners in Assam), the initiative is aimed at creating new marketing channels on a long-term perspective.

Secured clearance

NRL has secured an order to supply diesel to Bangladesh Petroleum in 2007. However, the order could not be executed due to lack of clearances from the Indian authorities. “We have already secured the due clearances (port of call) this time and are hopeful of entering the export market,” a source said.