HPCL Q1 net drops 53 pc on lower refiner margins, inventory losses

Hindustan Petroleum Corp Ltd (HPCL) on Wednesday reported a 53 per cent drop in June quarter net profit mainly due to inventory losses caused by fall in oil prices and lower refinery margins.

Net profit slipped to Rs 811 crore in April-June as compared to Rs 1,719 crore a year back, the company's Chairman and Managing Director Mukesh K Surana told reporters here.

"The decrease in profit is due to sharp decline in crude prices in the month of May and June 2019 leading to inventory loses both at refinery and marketing, and also lower average cracks for all products except for LPG and fuel oil," he said.

The company recorded an inventory loss of Rs 535 crore in Q1 as compared to an inventory gain of Rs 2,332 crore a year back.

An inventory loss occurs when a company buys raw material, crude oil in case of HPCL, at a particular rate but by the time it is able to process it and turn into finished products, the prices have fallen. Since the final product prices are market linked, the ...