HPCL's margins improved on throughputs, marketing volumes, says M K Surana

Hindustan Petroleum Corporation Ltd (HPCL) gained around Rs 248 crore from the exchange rate fluctuation during the fourth quarter, says its chairman and managing director M K Surana in an interview with Swati Khandelwal. Surana also added that sanction on Iran will not have a major impact on their crude supplies.

Profit after tax jumped over 70% on a sequential basis and margins rose too. What led to this performance?

Better throughputs, marketing volumes, operational efficiency and inventory helped us in getting better margins. In addition, the exchange rate fluctuations remained positive in this quarter.

Rupee appreciated a lot during the quarter. Did it have any impact on the forex front?

In this quarter, we gained around Rs 248 crore from the exchange rate fluctuation but there was a loss of Rs 579 crore on a yearly basis.

Sanctions on Iran and unrest in the Middle East is supporting the crude prices. Did the sanctions had an impact on Iranian supplies? Also, update us on the new year's sourcing contracts with Iran?

Iranian oil doesn't have much space in HPCL's total sourcing strategy and that's why it will not have any substantial impact on us. Interestingly, its alternate crude is available with us.

Update us on HPCL-MRPL merger. There are reports that it is facing certain roadblocks as Oil and Natural Gas Corp (ONGC) is not in favour of share swap deal?

What is the source of his information? Secondly, I can't comment on newspaper reports, but I don't think that there is any specific input from HPCL or ONGC's side.

Companies like Maruti and Tata are phasing out small diesel engines. Will this have an impact on your business? At the same time, also update us about your BS-VI upgradation plans.

BS-VI will replace BS-IV, and in the process, the vehicles will be using a new variety of fuel in the coming days. Thus, the auto industry will also have to upgrade themselves and come up with BS-VI compliant vehicles so that they can reap the benefits of the new fuel. However, the existing vehicles will also run on the BS-VI fuel but will not benefit as they are not compliant with the new fuel. So the needed conversions should be done. As far as refineries are concerned, projects related to upgrading the facilities to make the two refineries compliant to BS-VI norms are underway. It also involves our expansion projects, which are in an advanced stage and BS-VI fuel will be rolled out on April 1, 2020.

Elections results are around the corner. Do you think that the oil marketing companies (OMCs) will raise the fuel prices in the coming days?

It would be wrong to speculate because the prices of diesel and petrol are based on international prices. There is an assessment to track the movement of the prices. And, there is a stop and stop-not to control the daily price. Actually, there is a crude, which is processed and has to go through a process. So it is not so that there is a direct correlation, but there is a methodology to decide.

Hypothetically, what will happen with the economies, financials and strategy if crude prices cross $100/barrel?

It will be decided when the crude is priced at $100/barrel as there is no one today who talks that crude will reach such levels. I don't think so.