- State-run Indian Oil, BPCL, and HPCL reported a combined net loss of Rs 18,149 crore in April-June quarter
- Losses were much lower than the Rs 78,481 crore estimated by Petroleum Minister Hardeep Singh Puri
- Crude prices averaged $100.74 per barrel, up from $83.01 in the previous quarter
State-run fuel retailers — Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp — reported a combined net loss of Rs 18,149 crore for the April-June quarter, a sharp reversal from a year earlier but less than a quarter of the Centre's estimate of losses from selling fuel below market prices during the West Asia crisis.
The combined loss was significantly lower than the Rs 78,481 crore that Petroleum Minister Hardeep Singh Puri said last month the companies had incurred from retail fuel sales during the quarter, when crude prices spiked amid the US-Iran conflict.
Puri, responding on July 2 to questions on whether the government would cut pump prices after crude retreated following a US-brokered Iran-Israel ceasefire, said the losses reflected the cost of shielding consumers from higher global oil prices.
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Average Indian crude prices rose to $100.74 a barrel in the April-June quarter from $83.01 in the previous three months.
The better-than-expected quarterly performance was largely supported by inventory-related gains, although losses on subsidised LPG sales continued to weigh on earnings.
Indian Oil Corp, the country's largest fuel retailer, said losses on selling petrol and diesel below cost were highest at the start of the quarter but eased substantially by June as crude prices softened, retail fuel prices were raised, and excise duty was reduced.
During an analysts call, the IOC management said that the company booked losses on crude inventories as prices fell toward the end of the quarter, but these were partly offset by gains on finished-product inventories. Those gains were unusually high at about Rs 15,000 crore, helped by large inventory holdings and higher retail prices.
Q1 Loss
The April-June quarter marked a sharp reversal from a combined net profit of Rs 16,184 crore a year earlier.
HPCL posted a net loss of Rs 11,526 crore, compared with a profit of Rs 4,371 crore a year earlier. BPCL reported a loss of Rs 3,963 crore versus a profit of Rs 6,124 crore, while IOC posted a loss of Rs 2,661 crore against a profit of Rs 5,689 crore.
The management of HPCL said it had built higher-than-normal crude and product inventories to ensure uninterrupted fuel supplies during the West Asia crisis. As crude prices corrected sharply toward the end of the quarter, the company incurred a significant inventory write-down, although it did not quantify the impact. The quarterly loss would have been materially lower without the inventory hit, the company said.
HPCL added that processing lower-cost crude purchased after the price correction could support earnings in the July-September quarter, although the extent of the benefit will depend on the direction of crude prices.
LPG Drag
Losses on domestic cooking gas remained a major drag despite healthy refining margins.
HPCL said LPG under-recoveries averaged about Rs 510 per cylinder during the quarter, worsening to Rs 680 in June before easing to around Rs 490 in July. Its cumulative uncompensated LPG losses rose to Rs 16,400 crore at the end of June from Rs 12,800 crore at the end of March. BPCL's cumulative LPG under-recovery buffer rose to Rs 15,800 crore at the end of June from Rs 12,300 crore three months earlier, despite receiving Rs 19,000 crore in government compensation during the quarter. For Indian Oil, too, LPG under-recoveries remained elevated despite government support. Its cumulative LPG under-recovery buffer rose to Rs 29,700 crore at the end of June from Rs 23,100 crore in March, despite recognising Rs 3,600 crore in compensation during the quarter. LPG losses narrowed to about Rs 475 per cylinder in July from around Rs 665 in June as Saudi contract prices eased.
IOCL expects under-recoveries to average about Rs 250 per cylinder in the current quarter if Saudi contract prices remain near current levels, aiding earnings.
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