Date:27/07/2006 URL: http://www.thehindubusinessline.com/2006/07/27/stories/2006072704360100.htm

HPCL in loss

Our Bureau

Suffers under-recoveries of Rs 2,133 crore

Bearing the brunt
High crude, product prices affect bottomline
Income goes up 37.19 pc on back of rise in sales
Plans to add 650 retail outlets; 500 in rural areas
No proposal to hive off stake in MRPL
Open to partnership in Bhatinda refinery project

New Delhi , July 26

HPCL, the second biggest State-owned refiner, has posted higher net loss of Rs 607.67 crore for the first quarter of the current fiscal compared to net loss of Rs 507.89 crore for the corresponding previous period, mainly due to selling petroleum products below cost price.

However, total income (net of excise) increased 37.19 per cent to Rs 20,776.19 crore (Rs 15,143.71 crore).

Speaking to newspersons, Mr M.B. Lal, Chairman and Managing Director, said that a net amount of Rs 90.42 crore has been accounted as discounts received from refineries on the purchase of products from them towards sharing under-recoveries on petrol, diesel, kerosene sold through the public distribution system, and domestic LPG.

Financial results for the quarter have been adversely affected due to high crude and product prices, which could not be fully passed on to the consumers.

The under-recoveries on petrol, diesel, kerosene and LPG were partially compensated by the upstream oil companies as advised by the Government.

Accordingly, an amount of Rs 1,236.11 crore (Rs 686.90 crore) has been accounted towards discount received from ONGC and GAIL (India) on purchase of crude oil, LPG and kerosene.

Despite the price revision on petrol and diesel on June 5, the company continued to lose Rs 5.59 per litre on petrol, Rs 7.89 on diesel, Rs 18.8 on kerosene and Rs 133 per cylinder on LPG, Mr Lal said.

The company suffered under-recoveries to the tune of Rs 2,133 crore (Rs 1,249 crore).

As regards sale of products, Mr Lal said that the price increase had not dented sales; the company was able to increase its market share to 19.5 per cent during the period.

HPCL earned $9.3 from processing each barrel of crude oil into fuels.

The refineries operated at 130 per cent of capacity during the quarter under review, compared to 90 per cent earlier.

The company has no plan to shut down its refineries during the fiscal, Mr Lal said. HPCL plans to process 16 million tonnes of oil, 23 per cent more than the previous year's 13 million tonnes, he added.

On the gross refining margins, Mr Lal said that they stood at $9.59 a barrel at the Visakhapatam refinery and $8.82 at Mumbai before adjusting the refinery discount for sharing under-recoveries on the four petroleum products amounting to Rs 230.31 crore.

The company proposes to spend Rs 900 crore on its retail network, of which Rs 200 crore would be spent on the automation project.

HPCL has 7,500 retail outlets, of which 600 are in rural areas. It plans to add 650 retail outlets, of which 500 would be in the rural areas.

On the Bhatinda refinery project, Mr Lal said that the company was going ahead on its own but was open to roping in partners. Asked whether the company was planning to hive off its stake in MRPL, he said: "There is no proposal to sell the stake. HPCL, in fact, is in dialogue with MRPL to enhance co-operation in the operational areas."

The HPCL scrip closed at Rs 221.15 on the BSE on Wednesday, down from Rs 214.85 on Tuesday.