Expect Q4 GRMs to be similar to Q3: BPCL

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Expect Q4 GRMs to be similar to Q3: BPCL

BPCL has announced its third quarter results. The company’s Q3 gross refining margins are at USD 3.48 per barrel. S Varadarajan, director - finance of BPCL expects GRMs to be similar in Q4.

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Excerpts from Business Lunch on CNBC-TV18 Watch the full show » ALSO READ See latest News about BPCL See previous management interviews See what other Experts & Brokerages are saying about BPCL BPCL BSE | NSE 30/05/12 Are Mutual Funds betting on BPCL?

BPCL has announced its third quarter results . Its Q3 net profit stands at Rs 3,140 crore versus Rs 187 crore, year-on-year, YoY.

The company's Q3 gross refining margins are at USD 3.48 per barrel. S Varadarajan, director - finance of BPCL expects GRMs to be similar in Q4.

Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.

Q: Can you just tell us about this quarter's performance?

A: For the quarter, the crude throughput has been much higher at almost 6.13 million tonne. This compares to the corresponding quarter last year of almost 5.03 million tonne. There has been an increase in the crude throughput, both the refineries put together.

As far as the market is concerned, clearly the sales volumes, total sales have increased to almost around 8.99 million tonne. This compares favourably with almost 8 million tonne during the corresponding quarter last year. The growth has been quite attractive in retail. That has grown almost at around 15.6%. There has been a growth of almost 8% in LPG and around 5% in MS so that is on the physical side.

On the financial side, there has been a profit for the quarter, but cumulatively there has been a loss of around Rs 2,652 crore. On the subsidy side, since the cash compensation has come in for both the quarters, which have been accounted now in the current quarter, I would like to give a cumulative picture.

Cumulatively, we had an under recovery of almost around Rs 22,787 crore for the nine months period. Of this, 38% has been compensated by the upstream cumulatively. That amounts to almost Rs 8,600 crore.

We have got subsidy from the government to the extent of 46%. That translates into Rs 10,500 crore. That means that almost 16%, Rs 3,650 crore, has still been left unabsorbed in the books of BPCL.

Q: Effectively, how much do you think you will get for the next quarter?

A: We need to wait and see as to how the policy framework changes for the last quarter. We will wait for the government to announce the final compensation, as and when the final numbers are frozen for the under recovery.

Q: The GRMs have come around at USD 2.78 a barrel. Do you think the worst is over in terms of GRMs because in the first half of the fiscal it was very tough for you because of the premium you had to pay on light crude? What is the outlook like for the second half?

A: The GRM for the October-December quarter of the current year has been quite attractive. We have done a USD 3.48 a barrel, both refineries put together. That compares fairly well. In the first six months, there was a lag in the refining margin, GRMs.

Cumulatively, we have now almost around USD 2.78 a barrel for the nine months period. But this USD 3.5 a barrel, which represents the last quarter, we are seeing the similar trends as far as the current quarter is concerned. So, the GRMs have clearly remained as it was in the October December quarter, atleast during January and February. So, the GRM should end up more or less at similar trends in the last quarter.