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BPCL Q2 takeaways: Profit turns sweeter after cost-cutting measures, improvement in refining margins


NEW DELHI: Thanks to a sharp drop in expenses for the September quarter, Bharat Petroleum Corporation (BPCL) managed to deliver a profit to its shareholders even though the sales remained subdued.

Data from various agencies show that petroleum consumption has reached pre-Covid levels, which should be music to company management’s ears. Moreover, the company said it has also improved refining margin for the half-year ended September despite disruptions in the economy, which is also a good sign.

Here are key takeaways from the Q2 earnings:

How much did the company earn?

BPCL said its consolidated net profit grew by 58.44 per cent year-on-year (YoY) to Rs 2,589.52 crore. However, the revenue of the oil marketing player declined 12.29 per cent YoY to Rs 66,331.22 crore.

How much product did the company sell?

The market sales of the corporation for the half-year ended September 2020 was at 16.47 MMT as compared to 21.36 MMT achieved during the half-year ended September 2019. Decrease is mainly in HSD-Retail (-24.91 per cent), MS-Retail (-23.19 per cent), ATF (-72.65 per cent), partly offset by increase in LPG (7.46 per cent).

What was the gross refining margin?

The company managed to improve on this metric but was still far below what companies like Reliance Industries manage. The average gross refining margin (GRM) of the corporation during the half-year ended September 2020 is $3.19 per barrel against $3.10 per barrel for April-September 2019.

What is the update on its voluntary retirement scheme?

The corporation has announced Voluntary Retirement Scheme (VRS) during July 2020 and the company has completed the process of acceptance of applications during the current quarter. An amount of Rs 634.06 crore has been charged to employee benefit expenses towards VRS compensation.

What is the exceptional item?

The company has included an expense of Rs 124.55 crore for share buyback under the Employee Stock Purchase scheme. The firm plans to spend a total of Rs 969 crore for this scheme.

Besides that, other Income for the half-year ended April-Sep 2020 includes Rs 94.88 crore on account of foreign exchange gain.