HPCL reports PAT of `2,637 cr for FY20

Gross sales for the FY20 was `2,86,250 crore as compared `2,95,713 crore for the previous year

NEW DELHI: Hindustan Petroleum Corporation Limited on Tuesday reported Profit after Tax of Rs 2,637 crore during FY 2019-20 as compared to Rs 6,029 crore for the previous year. The decrease in Net Profit is mainly because of impact of inventory losses due to sharp fall in crude prices and exchange rate fluctuations. Gross sales for the FY20 was Rs 2,86,250 crore as compared Rs 2,95,713 crore for the previous year.

HPCL reported a steep 99 per cent drop in its net profit to Rs 27 crore for the March quarter. The company had posted a net profit of Rs 2,970 crore in the corresponding period a year ago.

"The drop in net profit was mainly because of inventory losses and exchange rate fluctuations," HPCL Chairman and Managing Director M K Surana told reporters.

The company suffered an inventory loss of Rs 4,113 crore in the January-march 2020 quarter as compared with an inventory gain of Rs 1,224 crore in the same period a year back, he said.

An inventory loss is booked when a company buys raw material (crude oil) at a particular price but by the time it is able to ship it to the refinery and process it, international rates have fallen. As refinery-gate prices are aligned to prevailing benchmark international rates, an inventory loss is booked. Inventory gain happens if the reverse happens. Also, the company had a foreign exchange loss of Rs 975 crore as compared to a gain of 256 crore in January-march 2019. HPCL had a negative earning of $1.23 on turning every barrel of crude oil into fuel in the quarter as compared to a gross refining margin of $4.51 a barrel last year.

"Not accounting for inventory losses, the GRM was $9.37 per barrel in Q4 of 2019-20 fiscal as compared to $0.85 a barrel in the same period a year back," he said.

For the January-march 2020 period, HPCL registered gross sales of Rs 71,268 crore as compared to Rs 72,840 crore for the period January to March 2019. "Sales were lower mainly on account of sharp fall in crude prices during the current quarter," he said.

HPCL recorded domestic sales volume of 9.25 million tonnes in the fourth quarter, against 10.03 million tonnes in the corresponding quarter of the previous financial year. "The drop in sales is mainly due to the reduction in transportation fuel demand for fuel in the month of March 2020 due to nationwide lockdown to contain the spread of COVID 19," he said.

Demand has since last month started to pick up with the easing of lockdown restrictions and are now 82-85 per cent of the normal levels, he said adding demand had fallen to just 30 per cent in April. By end June or early July, demand would reach 90 per cent, he said adding in the current quarter there will be inventory gains from oil prices rising from $13 per barrel to $40. The firm's refineries at Mumbai and Visakh processed 4.54 million tonnes of crude during January-march.