Hindustan Petroleum Company Ltd (HPCL) on Saturday reported its highest ever quarterly web lack of Rs 10,196.94 crore within the June quarter as a freeze on petrol and diesel worth revision wiped away file refining margins.
A standalone web lack of Rs 10,196.94 crore throughout April-June compares with a web revenue of Rs 1,795 crore in the identical interval a yr again, in keeping with an organization’s submitting with the inventory exchanges.
Through the quarter, HPCL and different state-owned gas retailers Indian Oil Company (IOC) and Bharat Petroleum Company Ltd (BPCL) didn’t revise petrol and diesel costs in keeping with rising prices to assist the federal government include runaway inflation.
The basket of crude oil India imports averaged USD 109 per barrel however the retail pump charges have been aligned to about USD 85-86 a barrel value.
Due to the freeze, IOC too reported a web lack of Rs 1,992.53 crore for the June quarter.
Loss for IOC, which is sort of double the dimensions of HPCL, was smaller because it had huge oil refining and petrochemical companies to offset a few of the losses on gas advertising and marketing. HPCL however sells extra gas than it produces. To fulfill almost one-fourth of the market that it controls, it has to purchase petrol, diesel and LPG from refineries, who would promote the gas at market worth and never subsidised charges.
HPCL income from the sale of merchandise soared to Rs 1.21 lakh crore within the first quarter of the present fiscal yr that started on April 1 from Rs 77,308.53 crore a yr again. That is largely due to increased worldwide oil costs.
That is the largest quarterly loss that HPCL has ever incurred.
These losses negated file refining margins. HPCL earned USD 16.69 on turning each barrel of crude oil into gas on the refinery gate versus a gross refining margin (GRM) of USD 3.31 per barrel in April-June 2021.
“Through the present quarter, because of erosion within the advertising and marketing margins on motor fuels and LPG, the profitability is adversely impacted,” the agency stated in notes to its accounts.
HPCL additionally incurred a Rs 945.40 crore overseas change loss because of fluctuations within the change charge.
Whereas the federal government has maintained that oil corporations are free to revise retail costs, the three state-owned corporations have not defined the explanations for freezing the charges.
Usually, oil corporations calculate a refinery gate worth based mostly on import parity charges. But when the advertising and marketing division sells it at costs lower than import parity, losses are booked.
HPCL reported a pre-tax lack of Rs 13,496.66 crore on petroleum product gross sales in April-June in comparison with a revenue of Rs 2,381.53 crore within the year-ago interval. It had a pre-tax revenue of Rs 2,261.67 crore within the previous (January-March 2022) quarter.
The loss was regardless of gas gross sales rising to 1.45 million tonnes within the June quarter from 8.45 million tonnes a yr again. Its refineries transformed 4.81 million tonnes of crude oil into gas, nearly double of two.51 million tonnes in April-June 2021.
State gas retailers are purported to align charges with a global value day by day. However they’ve periodically frozen costs earlier than essential elections.
IOC, BPCL and HPCL stopped revising charges forward of meeting elections in states like Uttar Pradesh. That 137-day freeze resulted in late March with costs being raised by Rs 10 per litre every earlier than one other spherical of freeze got here in drive in early April.
That is regardless of worldwide oil costs hovering to multi-year excessive on provide issues following Russia’s invasion of Ukraine.
The federal government in Could reduce excise obligation on petrol and diesel which was handed on to shoppers as a substitute of getting used to sq. off mounting losses on the 2 gas gross sales.
The present freeze on petrol and diesel costs, excluding the discount because of a reduce in excise obligation, is now 122 days lengthy.
Final month, ICICI Securities in a report said that IOC, BPCL and HPCL bought petrol and diesel at a lack of Rs 12-14 per litre, utterly offsetting the robust refining efficiency throughout the quarter.