The Hindu Business Line : BPCL hopeful of improving margins with capacity expansion

BHARAT Petroleum Corporation Ltd is looking to improve its gross refinery margins by further raising the heavy-sour crude percentage at its Mumbai refinery.

The company has completed a Rs 1,800-crore capacity expansion of its Mumbai refinery recently, taking up its capacity by three million tonnes from the existing 9 million tonnes a year.

Addressing the annual general meeting here on Friday, Mr Ashok Sinha, Chairman, BPCL, told shareholders that the refinery recently commissioned the hydro-cracker unit, last part of the refinery modernisation project. Once this unit stabilises and the processing volumes go up, the resultant flexibility will allow BPCL to use a higher percentage of cheaper heavy-sour crude oils, he said.

"In the current situation of strong refining margins and high crude costs, the additional capacity, as well as the ability to process cheaper crude oils, would help the refinery earn better margins," Mr Sinha said.

At present, up to 40 per cent of the crude used by the Mumbai refinery is of the cheaper heavy-sour variety. This is expected to go up by about 25 per cent once the refinery expansion becomes fully functional.

Bharat Oman Refineries Ltd that is implementing the Bina refinery has received deferment of local sales tax to the tune of Rs 250 crore a year from the Madhya Pradesh Government as also a waiver of central sales tax for 15 years, he said.

During 2004-05, the group's net profit reduced by about 12 per cent from Rs 2,364 crore to Rs 2,074 crore. The consolidated earnings for the BPCL shareholder reduced from Rs 67.80 per share to Rs 51.40 a share. The BPCL share gained Rs 3.15 today at the NSE, to close at Rs 398.90.

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