Oil marketing companies (OMCs) have declared second round of interim dividends for 2016-2017.
MK Surana, CMD of Hindustan Petroleum Corporation Ltd (HPCL) spoke about their interim dividend of Rs 6.40 per share. "Yesterday HPCL and all other OMCs have declared a second interim dividend and I am sure shareholders will be happy with that", he said.
Crude prices are on a downward trend and there is a close watch on the products and the crude prices and then adjust the market prices accordingly, he further added.
Talking about gross refining margins (GRMs) he expects to end the year (FY17) around USD 6 per barrel.
Below is the verbatim transcript of the interview.
Anuj: Bonanza to shareholders but before we discuss that when will the users of products get the bonanza? Crude is down to below USD 50 per barrel, we have a rupee surging and still we have not seen any kind of move from OMCs on petrol and diesel?
A: Yesterday, HPCL and all other OMCs have declared a second interim dividend and I am sure that the shareholders will be happy with that because even the first interim dividend was quite good, which was declared somewhere in February this year.
As far as the crude prices are concerned, yes, that is on a downward trend. We keep a close watch on the product and the crude prices and adjust the market prices accordingly and we are on a watch and as a when required we will make adjustment to that effect.
Anuj: What kind of marketing margins are you sitting on and your GRMs would take a hit I am assuming, so is there a thinking that you may want to compensate that via the marketing side, just trying to understand from shareholders point of view?
A: No, there is a mechanism of the build-up of the product prices, which starts from the refinery (refinery transfer prices) RTPs, then the freight elements etc and it is overall sum total which ends up into the selling price. So, it takes care of everything whether it is crude price, whether it is an exchange rate, and accordingly the product prices are adjusted.
Sonia: On the GRMs, can you give us a little more clarity on what the next couple of quarters could look like because Singapore GRMs have fallen in Q4 about USD 0.3 a barrel what would your own GRMs be?
A: We should end up the year with around USD 6 a barrel.
Sonia: What about say in the first half of FY18, would the trajectory be around the same?
A: We need to see because there is a meeting of Organization of the Petroleum Exporting Countries (OPEC) in May again and what impact it has got on the crude prices we need to watch and which direction the crude prices take because you would have observed in last few days the crude has been heading southwards, it is below USD 50 now Brent crude. So, we need to see about that, but as far as the GRMs are concerned, I had said earlier also it is the function of crude prices and it is also the function of volatility in the market and our own efficiencies.
As far as our own refineries are concerned, we are already doing quite well. We have crossed the record throughput of any earlier years in this year just around 8 days back, means 8 days ahead of the year end, so operational efficiency wise we are doing well. The crude prices are moving little bit southward and we need to watch it and also need to see whether there is any impact on the inventory losses or something like that.
Anuj: It is a bit unusual, of course it is March end so the government would also want to take care of its balance sheet but to have two back to back dividends in a month is this also a bit of a precursor to the mega move that the government has been talking about, have you heard anything more on that the HPCL-ONGC (Oil and Natural Gas Corporation) merger?
A: These are independent issues and as a company we do take care of the aspiration of the shareholders as well as our own growth plans and the profitability year-to-year and the distributable profits available. So, dividend is a function of that and so we have given interim dividend yesterday.
As far as mergers are concerned, the clarity is yet to emerge and as and when we get more clarity then we will let you know accordingly.
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