Hindustan Petroleum Corporation Ltd on Wednesday reported a 36 per cent drop in its June quarter net profit after one of its two oil refineries took a maintenance shutdown, reducing crude oil processing.
Net profit in April-June fell to Rs 1,795 crore from Rs 2,183.83 crore in the same period a year back and Rs 3,017.96 crore in the preceding quarter.
HPCL Chairman and Managing Director Mukesh Kumar Surana said the company's Mumbai refinery was shut for 45 days in the quarter for completing the expansion of the capacity and unit revamps.
This brought down crude throughput (or the amount of crude oil turned into fuel) to 2.51 million tonnes in April-June from 3.97 million tonnes a year back.
While the Mumbai refinery operated at 25 per cent of its capacity due to the shutdown, HPCL's Vizag unit operated at 98 per cent capacity in April-June.
"The profitability is also dependent on margins on products (such as petrol and diesel)," he said.
The company earned USD 3.31 on turning a barrel of crude oil into fuel as compared to a gross refining margin of USD 0.04 per barrel in April-June 2020.
Turnover was up 68 per cent to Rs 77,586 crore as oil prices soared from lows hit last year.
"During April-June 2021, HPCL achieved a total sales volume of 8.83 million tonnes against 7.62 million tonnes in previous year for the same period representing a growth of 15.9 per cent," he said.
HPCL also buys products from other refiners to sell through its petrol pumps.
"During the quarter, the sales of major products have shown significant growth compared to the same period last year in spite of an aggressive second wave of Covid-19 pandemic forcing partial lockdowns across the country.
"The sale of petrol recorded growth of 36.6 per cent, diesel 22.2 per cent and ATF 118.8 per cent," he said.
While petrol sales in July reached pre-pandemic levels, diesel is about 10 per cent short, he said adding August is generally a slow month for diesel due to monsoon but sales is likely to pick up from the festive season and harvesting thereafter in November/December.
"Diesel sales should reach pre-pandemic levels or maybe about a percent lower than that by the end of the year," he said.
Surana said after the expansion, the Mumbai refinery will now have a capacity of 9.5 million tonnes from 7.5 million tonnes now.
On prices, he said domestic fuel rates are dictated by benchmark international rates as India is 85 per cent dependent on imports to meet its oil needs.
Crude prices are likely to stay in the range of USD 70-75 per barrel in the near term or at least till March 2022 unless there was a major third wave of coronavirus infections which would impact demand, he said.
He hinted that the domestic retail selling price of petrol and diesel are unlikely to be lowered unless international oil rates fall.
"Prices should hold," he said.
Asked if the Indian fuel demand was inelastic to price given that petrol consumption has risen despite rates at a record high, he said, "demand is driven by need rather than price. I don't think there is any impact of prices on the demand."
People are choosing personal transport over public due to concerns over Covid-19, thereby fueling consumption, he said.
Surana said in order to provide multiple choices to the customers for their energy needs, HPCL has entered into a strategic partnership with Tata Power, India's largest integrated power company, to provide EV charging at its petrol pumps in various cities and major highways.
During the quarter, HPCL commissioned 142 new retail outlets taking the total retail outlet network to 18,776 as of June 2021. CNG facilities were added in 50 retail outlets taking the total number of HPCL outlets with CNG facilities to 724 as of June 2021.
During the quarter, HPCL solarised 110 more outlets. "With this, 25 per cent of HPCL's retail outlet network runs on solar power," he added.