After Indian Oil Corporation, now Hindustan Petroleum Corporation Ltd (HPCL) has reported a drop in its net profit for the first quarter of the current fiscal due to inventory losses.

The public sector oil refiner-cum-retailer has reported a net profit of ₹924.75 crore for the first quarter of financial year 2017-2018. This is less than half of the ₹2,098-crore net profit reported for the corresponding quarter of the last financial year.

The plunge in bottom-line is because of a ₹1,595-crore hit due to inventory loss. HPCL Chairman and Managing Director MK Surana said: “During the first quarter of the financial year 2017-2018, there was an inventory loss of ₹960 crore in marketing and ₹635 crore in crude oil oil inventory. Comparably, there was an inventory gain of ₹1,935 crore in the corresponding quarter of the last financial year.”

This inventory loss for oil refiner and marketing major translated to a hit in Gross Refinery Margins. GRM for the quarter ended June 30 stood at $5.86 per barrel during the current fiscal. The GRM was $6.83 per barrel in the last financial year during the corresponding period.

The core GRM (margin earned by the refiner without accounting for inventory gain or loss) stood at $8.81 per barrel during the first quarter of fiscal 2017-2018. Comparably, the core GRM during the first quarter of the last fiscal was $3.55 per barrel. HPCL Director (Finance), J Ramaswamy said: “The difference in the margins is mainly due to higher product cracks.”

In response to queries on the crude oil price and whether the company will be in a position to reverse the inventory loss in the coming quarter, Surana said: “We expect crude oil prices to be slightly firmed up in the current quarter. But the price is likely to remain below $55 per barrel.”

HPCL scrip closed 8.65 per cent higher at ₹431.65. The company did not declare any dividend for the quarter.

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