BPCL reports Rs 2,500 crore of inventory loss in FY15Q3 but manages to swing to profits

MUMBAI: Bharat Petroleum Corporation booked an inventory loss of Rs 2,500 crore in the third quarter of 2014-15 as crude prices plummeted, denting the refining margin of the company.

Despite the inventory loss, the state-run oil marketing company reported a profit of Rs 551.16 crore in the December quarter as against a loss of Rs 1,088.94 crore, driven by full compensation for losses on fuel sales. Its net sales declined to Rs 57,914.51 in October-December from Rs 64,767.62 crore earlier.

"Our gross refining margin has been under pressure due to an overall inventory loss of Rs 2,500 crore. We hope that crude prices would recover in the fourth quarter and demand would pick up too," P. Balasubramanian, director- finance, told ET.

BPCL earned $1.5 on converting every barrel of crude oil into fuel in the quarter as compared to gross reefing margin (GRM) of $1.7 per barrel a year ago, he said.

BPCL received Rs. 1,080 crore by way of cash subsidy from the government. The upstream oil producers, primarily ONGC, gave BPCL an assistance of Rs 2,330 crore to compensate for the losses on selling domestic LPG and PDS kerosene at rates lower than cost.

The company’s sales volume declined 1.6% in the quarter as against a growth of 3.5% a year ago. "Sales volume has been low as diesel sales has been weak. Diesel sales has been also impacted by the entry of private retailers," said Balasubramanian.