Mangalore Refinery and Petrochemicals Limited (MRPL) has posted a stellar profit growth of over 77 per cent in the first quarter with a strong gross refining margin (GRM) of $10 per barrel. Speaking to BTVi , MRPL Managing Director H Kumar says half of the GRM gain was due to inventory. After the Phase-III expansion, MRPL will be able to refine heavier crude oil of API (American Petroleum Institute gravity) ranging 18-20 compared with present 32-33. MRPL may now attain 26-28 average API, Kumar said. Apart from crude, MRPL is now producing 1 million tonnes of LPG and 4,40,000 tonnes of polypropylene, which is mainly a value driver, he said. Excerpts:

How did you manage a GRM of $10 per barrel? Is it because of the inventory gain?

Yes, around $4.5-4.6 of the GRM is on account of inventory gain. The rest is the core GRM.

Currently, what is your average inventory and how many days do you hold the inventory for?

The inventory pattern varies depending upon the throughput and other things. Normally, we hold 600,000-800,000 tonnes at the end of the financial year.

Do you see any cool-off in the gasoline and diesel cracks?

Gasoline has improved a bit. It had gone down quite substantially and now it has come up. And even gasoline is also hovering over $10 per barrel. So September has been good. July was bad and August was quite okay. And September is certainly a good month for refiners.

With the Phase III expansion are you now capable of handling heavy crudes?

In terms of API, which is the identity of the crude, earlier we were able to process around 32-33. Now we can go up to 26-28 average API and this means that we will be able to process more heavy crude. As part of the Phase III expansion, we have gone in for a high metallurgy CDU (crude oil distillation unit) column that has 3 million capacity, where we can even process very heavy crudes, around 18-20 API.

How much benefit will this push towards the processing heavier crudes bring to the GRM?

We can process around 3 million tonnes of heavy crude. The balance will be kind of medium crude. It is not only the crude that balances quite substantially on the margin. There are other aspects such as the increase in production of LPG. Now our production LPG is almost a million tonnes per annum. And we are also producing 440,000 tonnes of polypropylene, which is mainly a value driver.

Your throughput was lower this quarter mainly because of water stoppage from Netravati river. So What is your outlook going ahead?

Yes, you are right. We have lost 230,000-240,000 tonnes compared with Q1 of last year. But the good part is we have already made up the throughput loss in the month of July and August, and going forward we will hopefully surpass last year’s record.

Your polypropylene unit has been operational for 15 months.How is it performing?

Our polypropylene has been received well in the market; we have close to 45 per cent of the market share in South India, which is quite substantial. And we have penetrated into Western India and Central India. So polypropylene business is doing very good and our marketing team has been doing a wonderful job on that.