HPCL reports steep drop in net profit

State-owned Hindustan Petroleum Corporation Ltd (HPCL) today reported a steep drop in the net profit for the quarter ended December 31, as refining margins shrunk and the government did not compensate it fully for fuel losses.

The company posted net profit of Rs 147.11 crore for October-December, compared to the net profit of Rs 2,725.18 crore in the year-ago period, HPCL executive director (finance) K V Rao told reporters.

During the first nine months of the 2012-13 fiscal year, the company lost Rs 27,706 crore on sale of diesel, domestic LPG and kerosene at the government-controlled rates. Of this, Rs 10,041 crore was made good by upstream firms like ONGC, and another Rs 12,205 crore came as cash subsidy from the government.

"There is Rs 5,460 crore unmet under-recoveries," he said adding that the company had debts close to Rs 36,000 crore. Fuel retailers are currently losing Rs 9.22 per litre on diesel, Rs 31.60 a litre on kerosene and Rs 481.03 per 14.2-kg on domestic LPG cylinder.

HPCL, which has been borrowing $400-500 million every year in overseas loans, is looking at raising an equivalent amount in external commercial borrowings (ECBs) before March end.

"We have an approval from the RBI to raise $750 million in foreign debt. The remaining (after raising $400-500 million of ECB) will be raised through bonds this fiscal year or the next," Mr Rao said, adding that the company is in the process of appointing agency to do credit evaluation of the firm.

The company earned $1.92 on turning every barrel of crude oil into petroleum products during the quarter as compared to a gross refining margin of $4.09 per barrel in a year ago period, he said.