In intraday trade on Friday, shares of Hindustan Petroleum NSE -3.53% (HPCL NSE -3.53%), a state-owned natural gas and oil corporation, dropped more than 4% to Rs 202 as the business announced its second consecutive quarterly loss.
While it had reported a net profit of Rs 1,918.89 crore during the same period last year, HPCL had a net loss of Rs 2,475.69 crore in the quarter from July to September of FY23. The business reported a loss of Rs 8,557 crore in the prior quarter.
However, the net loss decreased in the second quarter of fiscal year 2022-23 as a result of a one-time government grant for LPG worth Rs 5,617 crore, according to the business.
Hindustan Petroleum Corporation Limited (HPCL) is a Mumbai-based Indian oil and gas refining business. ONGC has held a majority share in the company since 2018. As of 2016, the company was rated 367th on the Fortune Global 500 list of the world’s largest corporations. On October 24, 2019, the corporation was designated as a Maharatna PSU.
The Esso (Acquisition of Undertakings in India) Act 1974 resulted in the incorporation of HPCL in 1974, following the takeover and merging of the former Esso Standard and Lube India Limited. The Government of India took over Caltex Oil Refining (India) Ltd. (CORIL) in 1976 and merged it with HPCL in 1978 by the CORIL-HPCL Amalgamation Order 1978. The Kosangas Company Acquisition Act 1979 united Kosan Gas Company with HPCL in 1979.
Following a lawsuit by the Centre for Public Interest Litigation (CPIL), the Supreme Court of India barred the Central government from the privatisation of Hindustan Petroleum and Bharat Petroleum without Parliament’s permission in 2003. Rajinder Sachar and Prashant Bhushan, attorneys for the CPIL, stated that the only method to disinvest in the enterprises would be to repeal or alter the Acts that nationalised them in the 1970s. As a result, the administration would require a majority in both chambers to pass any privatisation legislation.
HPCL has grown steadily over the years. Refining capacity increased from 5.5 million metric tonnes (MMT) in 1984/85 to 14.80 MMT in March 2013. On the financial front, net income from sales/operations increased from 2687 crores in 1984-1985 to 2,06,529 crores in 2012-2013. Its net profit for the fiscal year 2013-14 was Rs 1740 crores.
The deficit in the second quarter of the current fiscal year was despite accounting for a one-time subsidy made by the government on October 12 to cover the majority of the losses incurred by oil PSUs in the previous two years by selling cooking gas LPG below cost.
HPCL said it received Rs 5,617 crore to compensate under-recoveries incurred on domestic LPG sales during the fiscal year 2021-22 and the current period, which have been correctly recognised in July-September 2022.
On October 12, the government announced a one-time compensation of Rs 22,000 crore to three state-owned fuel merchants to offset losses suffered from selling home cooking gas LPG below cost during the previous two years.
In addition, the company suffered a foreign exchange loss of Rs 1,548.51 crore during the year under review. The cumulative net loss of Rs 2,475.69 crore in July-September and Rs 8,557.12 crore in April-September contrast to a profit of Rs 1,918.89 crore in the second quarter and Rs 3,922.79 crore in the first half of the previous year. In July-September, revenue from operations increased by 30% to Rs 1.13 lakh crore.
In the second quarter, HPCL sold more petroleum products domestically and refined more crude oil.