Helped by cash subsidy from the government, Hindustan Petroleum Corporation Ltd (HPCL), India’s third-largest refiner, managed to report a net profit of Rs 31.4 crore in the quarter ended December 2009. It posted a net loss of Rs 422 crore in the corresponding quarter last year.
The government had last week issued letters to the public sector oil marketing companies stating they would be given cash subsidy for selling cooking fuels below the market price. HPCL would get Rs 2,529 crore out of a total subsidy of Rs 12,000 crore that has been promised for three companies, including Bharat Petroleum and Indian Oil Corporation, for the full 2009-10. Of this, HPCL has accounted for Rs 1,897 crore in the first nine months.
The letter has been taken on the books of the company as money received from the government, though the actual flow of funds will happen only after the government gets parliamentary approval for the same. Besides, HPCL got another Rs 448 crore out of the budgetary provision for subsidies.
A senior HPCL executive, however, said, “The profit is mainly owing to inventory gains in the quarter as against the comparable quarter last year which was particularly bad because of huge inventory losses. Also, we have been helped by foreign exchange variation and low underrecoveries as compared to the third quarter last year.”
Besides government subsidy, HPCL’s underrecoveries on sale of auto fuels were shared by the upstream oil companies in the form of discount in respect of crude oil, LGP and kerosene.
