HPCL posts 922 percent jump in Q1 FY09 net loss on high crude, product prices

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HPCL, India's second largest oil company, said its net loss in the June quarter plunged to Rs.888.12 crore from Rs.86.93 crore (year-on-year or YoY decline of 921.64 percent).

The refiner, India's third biggest, said its gross sales in Q1 of FY09 stood at Rs.31,255.94 crore as against Rs.23,581.17 crore posted in Q1 of FY08 (YoY rise of 32.54 percent).

Net sales (income from operations) stood at Rs.34,749.32 as against Rs.21,881.70 crore (YoY rise of 58.80 percent) while total income rose to Rs.34,917.20 crore from Rs.22,216.13 crore (YoY rise of 57.17 percent).

During the quarter, its total expenditure rose from Rs.22,189.39 crore to Rs.35,396.95 crore (YoY rise of 59.52 percent).

While expenses on consumption of raw materials rose from Rs.7815.70 crore to Rs.10,101.71 crore (YoY rise of 29.24 percent), expenses on purchase of products for resale rose from Rs.12,888.17 crore to Rs.24,720.20 crore (YoY rise of 91.80 percent).

According to the company, its financial results for the quarter have been adversely affected due to high crude and product prices, which could not be fully passed on to the consumers.

In India, prices of fuel products are controlled by the government and state-run oil marketing firms sell them at mandated discounts.

In return, these companies are compensated partially through subsidies from upstream companies and oil bonds from the government.

From time to time, these companies also negotiate with banks to increase their borrowing limits to curb their losses but these are not long-term solutions, market analysts say.