Hindustan Petroleum Corporation has reported a net profit of Rs 2,725 crore for the quarter ended December 31, 2011, up from Rs 211 crore in the same period last year.
However, April-December still shows a net loss of Rs 3,720 crore, against a profit of Rs 416 crore. Interest costs for the nine months were also higher at Rs 1,707 crore (Rs 658 crore).
Net sales this quarter totalled Rs 47,917 crore, 41 per cent higher than Rs 33,902 crore in the quarter of 2010-11. The HPCL scrip closed 0.59 per cent higher at Rs 287.50 on Thursday.
According to the company, the turnaround this quarter was largely a result of higher discounts on crude and petro-products bought from the upstream combine of ONGC and GAIL. For the nine months ended December 31, the duo pooled in Rs 8,080 crore (Rs 3,420 crore) as part of the subsidy support mechanism to their refining counterparts.
Though this compensation is confined to a third of fuel losses as per the Government formula, the upstream companies' actual outgo has been closer to 38 per cent. In the case of HPCL, the potential losses for the fourth quarter on sale of subsidised fuels as well as the Rs 3,720 crore accumulated so far can only be covered with heftier discounts from ONGC and GAIL. As a result, these upstream companies could end up bearing nearly 39 per cent of fuel losses for the whole of 2011-12.