Mangalore Refinery: Poor performance in Q3 but promising future

MUMBAI: ONGC's subsidiary Mangalore Refinery (MRPL) reported a net loss of Rs 360 crore for the Dec '12 quarter as compared to a net profit of Rs 110 crore last December and Rs 1185.1 crore in September '12 quarter. The poor performance was a result of low refining margins and inventory as well as forex losses. The company's ongoing expansion holds promise for better prospects.

MRPL's gross refining margin (GRM) - the differential between revenue earned from refined products and the cost of crude oil needed to produce them - dipped to a low of $1.98 per barrel in the Dec '12 quarter as against $7.24 in Dec '11 quarter.

Other standalone refiners RIL and Essar Oil had posted GRMs above $9.5 per barrel for the quarter improving over their year ago performance.

MRPL's poor operating performance was mainly due to inventory losses, which stood at Rs 213 crore for Dec '12 quarter as against an inventory gain of Rs 728 crore in the year ago period. Similarly, the company also booked foreign exchange loss of Rs 257 crore, which was marginally lower than Rs 440 loss of Dec '11 quarter.

The company mentioned that the progressive commissioning schedule of MRPL Phase III Expansion project is progressing well and only few units are remaining to be commissioned. The overall project progress as on 15th January, 2013 is 97.80%. The commissioning of DHDT has been completed during this quarter.

The trial operation of One of the Gas Turbine Generator has been started, however the progress of CPP by BHEL continues to be critical and has delayed the commissioning schedule. The overall progress of Polypropylene Project has reached 85% as on 15th January, 2013. In addition, the company has started trial operations on Single Point Mooring System, which is expected to be fully operational by end February 2013.

These expansions hold promise of a better future for the company.