High cost of crude squeezes MRL's profit margins

By Our Corporate Reporter

CHENNAI, APRIL 1. Madras Refineries Limited (MRL), to be known as Chennai Petroleum Corporation Limited from April 6, has achieved a crude throughput of 7.01 million tonnes in the just concluded financial year against 6.75 million tonnes last year. The output was again more than 100 per cent. Addressing presspersons here today, Mr. S. Rammohan, Chairman and Managing Director, said MRL could achieve all time high production in respect of lube oil base stocks, aviation turbine fuel, linear alkyl benzene feedstock, propylene, polybutene feed stock and MEK feedstock. The Cauvery Basin Refinery (CBR) processed 6.3 lakh tonnes of crude and witnessed an all time high production of HSD (2.73 lakh tonnes). In view of the steep increase in international crude prices and to improve performance the company kept the crude inventory level at eight days of process requirement during the year.

Despite difficult conditions the company reported a turnover of Rs. 5,533 crores (provisional) against Rs. 3,747 crores in the previous year. But there was a dip in profit before tax to Rs. 190 crores from Rs. 276 crores in the previous year. While crude prices went up by 58 per cent, product prices were up only by 44 per cent resulting in lower margins. Direct marketing of products witnessed a rise of 10 per cent in volume to 5 lakh tonnes from 4.3 lakh tonnes while the value of these increased by 50 per cent to Rs. 675 crores from Rs. 445 crores.

Mr. C. S. Santhanam, director (finance) said MRL had replaced high cost borrowings with low cost ones. This would result in substantial savings in interest outgo in the coming year. He said the delay in subscription by National Iranian Oil Company (NIOC) to the private placement of equity offer at a premium of Rs. 70 per share was due to certain amendments proposed by NIOC in the formation agreement between it and the Union Government. Since the amendments have been finalised NIOC, which had already made a payment of Rs. 27.86 crores, would bring in the balance amount of Rs. 43.06 crores shortly, he said.

Mr. Rammohan said MRL was planning to expand its refining capacity at Manali at a cost of Rs. 2,360 crores. The expansion was cost effective as the existing infrastructure facilities would be adequate.

Regarding the funding for expansion Mr. Santhanam said one third of resources would be found through internal generation and the balance through market borrowing.

Mr. P. Srinivasan, Director (Technical), said MRL had already completed the relevant technical studies and was evaluating the tenders for awarding the works contract in respect of setting up a permanent Jetty facility in Nagapattinam for receiving crude oil for the Cauvery Basin Refinery.

The proposed power project of 500 MW in Manali will be using refinery residue as fuel and the power generated will be exported to the State grid after own use.

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Section  : Business
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