Bharat Petroleum Corporation Ltd (BPCL), the country’s second largest fuel retailer, reported a net loss of Rs 2,625 crore in the second quarter ended September 30, as the company sold fuels at below production costs and rupee depreciation contributed to inventory loss.
The state-run oil marketer, which owns two refineries and over 12,000 fuel retail outlets, had posted Rs 1,038.16 crore profit in the corresponding quarter of the previous financial year. Net sales, however, increased 50.28 per cent to Rs 37,826.20 crore in the reported quarter, as compared with Rs 25,170.37 crore in the year-ago quarter.
In the second quarter, BPCL incurred a loss of Rs 2,074 crore from selling petroleum products at a loss, said SK Joshi, director (finance) at BPCL. This is the portion of under-recoveries which is neither financed by oil bonds, issued by the government, nor by subsidy sale of crude oil by ONGC and OIL, the two state-owned oil producers.
In the current quarter, the state-run retailer said under recoveries amounted to Rs 10,277 crore. This was partially financed by oil bonds and subsidy from oil producers worth Rs 4,782 crore and Rs 3,420 crore, respectively, said Joshi.
Thus, BPCL incurred around 20 per cent of the estimated under-recoveries in the three months up to September, as against 18 per cent in the year-ago quarter.
The government, through oil bonds, and the oil producers bear a part of the under-realisations of the oil-marketing companies.
As the rupee depreciated fast against the US dollar, BPCL reported a foreign exchange loss of around Rs 700 crore in the reported quarter, with inventory loss alone accounting for Rs 606 crore.
Inventory loss arises when a company bought oil at higher prices which fell almost 45 per cent during the quarter.
The company also paid four times higher interest on its loans during the quarter as it borrowed more in the absence of any oil bonds. The interest payment during the quarter was Rs 533 crore compared with Rs 135 crore a year ago.
The average refinery margins of BPCL’s two refineries in Mumbai and Kochi fell to $3.1 per barrel compared with $3.75 per barrel in the corresponding quarter a year ago.
