BPCL slips into the red with loss of ~2,958 crore
Hit by a loss of inventory, state-run Bharat Petroleum Corporation (BPCL) reported a pre-tax loss of ~2,958.91 crore for the quarter ended March 31. During the same period last year, the state refiner had reported a profit.
As crude oil prices tanked globally, owing to a slowdown in industrial activity and demand, BPCL was forced to value finished goods inventory and raw materials at below cost.
The company said the impact of this has been reported under exceptional items worth ~1,310.35 crore.
In its results statement, BPCL said, “The outbreak of Covid-19 globally and the resultant lockdown in many countries, including from March 25 in India, has had an impact on business. Consequently, lower demand for crude oil and petroleum products has impacted prices and therefore refining margins globally.” The note added, “Due to this, certain finished goods inventory and certain raw materials of the group have been valued at net realisable value/replacement costs.” In the March 2019 quarter, BPCL reported a profit before income tax of ~4,961.79 crore. Loss after tax for the period was at ~1,819.56 crore against a profit of ~3,131.66 crore a year ago. BPCL’S average gross refining margin (GRM) for the full year of FY20 was at $2.50 per barrel, against $4.58 per barrel in FY19.
In a separate statement to the BSE on Wednesday, BPCL said the demand for petroleum products has increased by around 67 per cent in May over April.
Sales in May 2020 are lower by around 30 per cent compared to May 2019. On inventory management, the statement said, “BPCL managed the crude oil inventory by either deferring or cancelling some crude cargoes and diverting some to strategic petroleum reserves of the Government of India.”