Companies

HPCL reports ₹2,253-crore profit in Q1 on better inventory management

Our Bureau New Delhi | Updated on August 06, 2020 Published on August 06, 2020

HPCL reported an inventory gain of ₹633 crore in the first quarter of financial year 2020-21.   -  istock.com/TkKurikawa

Hindustan Petroleum Corporation Limited has reported a ₹2,252.65-crore consolidated net profit for the first quarter of financial year 2020-21. This is significantly higher than the ₹877.48 crore consolidated net profit reported in the same quarter of the previous financial year.

Consolidated total income during the period under review fell to ₹46,702.09 crore from ₹75,473.99 crore in the quarter ended June 30, 2019.

Explaining how the public sector undertaking oil marketing company managed to get higher profits while its peers reported subdued earnings, Chairman and Managing Director, Mukesh Kumar Surana, said, “We stored the products and not the crude oil. So, when the crude price fell, there was lesser impact. That has helped us get the additional margins. We could store the products at multiple locations in the country. Our cross-country network pipeline and marketing network also helped.”

HPCL reported an inventory gain of ₹633 crore in the first quarter of financial year 2020-21. The group had reported a ₹536 crore inventory loss in the same quarter of financial year 2019-2020. The gross refinery margin or gain per barrel of crude oil processed stood at $0.04 a barrel in the quarter under review. It stood at $0.75 per barrel in the comparable quarter of fiscal 2019-2020.

“We have tried to ensure we have a hedging strategy, and tried to take advantage of crude pricing without suffering inventory loss. There was also a higher demand pick up in rural areas because of lesser restrictions on account of Covid-19,” Surana added.

Crude oil price and petroleum demand outlook

Commenting on the crude oil price outlook, Surana said, “The crude oil prices have been around the $40-45 a barrel range for the past few months. From August 1, production cuts are also expected to the be relaxed by Organization of the Petroleum Exporting Countries.”

“Will additional production coming in, and the demand pattern stabilising, I think crude may remain in the current range for longer time. It will not be before the third quarter of the current fiscal where we see a substantial change in crude oil prices,” he said.

“We should not be surprised if there is a little bit dip in crude oil price too,” he added.

Commenting on the demand for petroleum products, Surana said the petrol demand is at around 89 per cent of last year’s levels while diesel demand is at 83 per cent. The overall product demand is at around 84 per cent of last year’s levels.

Surana said that he expects petroleum product demand to remain between 75 per cent and 90 per cent for some time. “The demand should again start growing the third quarter of the current fiscal,” he said.

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Published on August 06, 2020
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