Product price reduction hit MRPL profits

New Delhi, Oct 30 (UNI) Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of Oil and Natural Gas Corporation Ltd (ONGC) today said its profits during the second quarter had been badly hit by a sharp reduction in product prices returning a low of Rs nine crore.

The Company statement said it has earned a lower net profit of Rs 9 crore for the quarter (Rs 166 crore in the corresponding quarter) after providing for interest and finance charges of Rs 59 crore (Rs 44 crore), depreciation of Rs 87 crore (Rs 86 crore) and tax liability of Rs 5 crore (Rs 110 crore).

The financial performance has been adversely affected mainly due to the sharp reduction in products prices during September 2006, increased exports at Rs 3603 crore (from Rs 2019 crore) where in margins are lower as compared to domestic sales and discount on LPG and SKO,(Superior Kersosene Oil) to PSU OMCs.

The Ministry of Petroleum and Natural Gas (MOP&NG) has viewed that MRPL could seek refund of discounts on LPG and SKO from Oil Marketing Companies (OMCs) with effect from 1st April 2006, pending receipt of formal confirmation from OMCs, the Company has continued to account the LPG and SKO sales net of discounts.

The discounts on LPG and SKO accounted during the quarter is Rs 77 crore. (Cumulative for 6 months is Rs 142.88 crore).

The Company has taken up, with the Karnataka Government, for withdrawal of entry tax on Crude and Central Sales tax on sale of product, on inter state basis (irrecoverable taxes).

During the first half of the current year (April-September, 2006) the gross turnover was Rs 16,182 crore, (Up 17 per cent from Rs 13849 crores) and thruput 5.95 MMT (down 1.5 per cent from 6.04 MMT). The net profit during the half-year ended September 2006 was Rs 225 crore (down 41 per cent from Rs 382 crore).

The export sales during the first six months was Rs 6,400 crore (Up 74 per cent from Rs 3682 crore).

The company is proceeding with setting up of retail outlets, as the retail margins in petrol and diesel have since turned positive.

The company is also considering plans to start ATF marketing to airlines and setting up Auto LPG stations.

The company is in final stages of signing MOU with HPCL for domestic product sale infrastructure sharing.

The ISOM project of the company to produce Euro III/IV petrol has achieved mechanical completion. Commissioning activities have already been commenced and commercial production is expected to start from December 2006.

The Mixed Xylene project to produce value added Mixed Xylene will also start commercial production by November 2006.

The implementation of refinery up gradation cum expansion project, involving a capital expenditure of Rs 7,943 crore has started with appointment of Engineers India Ltd as the project Management consultants in June 2006.

The project, when implemented will(i) increase the distillate yield by about 10 per cent in lieu of low value black oil pool, (ii) increase the refining capacity to 15 MMTPA, (iii) lead to increased capabilities to process cheaper high sulphur and high TAN crude oils, even while producing the transportation fuels of Euro III / Euro IV standards and (iv) Enable MRPL entry into Lube Oil Base Stock (LOBS) market with 250000 tons per annum capacity.

The project is scheduled to be completed in 48 months time (June 2010).

UNI RT KR RK2055