State-run Hindustan Petroleum Corporation (HPCL) posted a consolidated loss before tax of Rs 2,653 crore for Q4FY20 compared to Rs 5,067 crore profit during the same period last year, over inventory losses and exchange rate fluctuations.
HPCL has written down Rs 1,002.93 crore because of inventory losses due to “drastic fall in oil prices accompanied with reduced movement in inventory”. The net impact amounts to Rs 750.51 crore for Q4FY20. The company said that while the impact was not much on sales and operations in 2019-20, its profitability was greatly impacted because its inventory hoIding on the reporting date needed to have been valued at net realisable value which was even lower than the cost.
For the period under review, the company registered gross sales of Rs 71,367 crore, down 2 per cent compared to Rs 72,925 crore in the same period in the previous year. Sales were lower mainly on account of a sharp fall in crude prices during the March quarter.
The consolidated profit before tax for 2019-20 dropped 86 per cent to Rs 1,374 crore compared to Rs 10,039 crore during the fourth quarter of 2018-19. Net sales for the year also saw a drop of 3 per cent from Rs 295,987 crore in 2018-19 to Rs 286,574 crore during the financial year 2019-20.
The combined gross refining margin (GRM) during the period January to March 2020 were a negative (-) $1.23 a barrel as compared to $4.51 a barrel in the corresponding period in the previous year. During the fourth quarter, HPCL posted an inventory loss of Rs 4,113 crore compared to an inventory gain of Rs 1,234 crore during the same period last year. For the entire financial year 2019-20, inventory loss was seen at Rs 4,253 crore against an inventory gain of Rs 1,363 crore in 2018-19. The company also suffered a foreign exchange loss of Rs 975 crore as compared to a gain of 256 crore in January-March 2019.
HPCL Chairman and Managing Director M K Surana said that not accounting for inventory loss, the GRM was $9.37 per barrel during the quarter under review, compared to $0.85 a barrel in the same period last year. The company said that its refineries continued with operations without any disruption to ensure availability of LPG, petrol and diesel for essential services during the lockdown. The refineries at Mumbai and Visakhapatnam processed 4.54 MT of crude during January-March 2020.
During January-March 2020, HPCL recorded a domestic sales volume of 9.25 million tonne (MT) against 10.03 MT in the corresponding quarter of the previous financial year. The drop in sales was mainly on account of a fall in demand for transportation fuel in the month of March 2020 due to nationwide lockdown to contain the spread of Covid-19. “Demand was low during the lockdown, it came down to as low as 30 per cent of normal fuel demand in the month of April. From April 20, demand started picking up. In May, it came to 65-70 per cent. As of June, we have touched 80-85 per cent of what it was during the same time last year on petrol and diesel,” he said.
During 2019-20, HPCL achieved the highest ever sales volume of 39.6 MT compared to previous year’s sales of 38.7 MT. Domestic sales of petrol increased by 4.7 per cent compared to financial year 2018-19 while LPG sales grew by 7.3 per cent.