You had document efficiency this quarter regardless of difficult occasions. Is that this a development that you just see persevering with?
Sure this was a tough time due to the corona pandemic and I believe the corporate has produced cheap outcomes. Now so far as this quarter is anxious, one differentiator which now we have is that our refineries labored to nearly 100% capability despite demand contractions in April. However subsequently demand picked up in Might and June. Since our advertising and marketing capacities are larger than refining capability, to that extent it helped us to run our refineries to full capability.
The advertising and marketing infrastructure additionally helped us to take the product and retailer it at numerous places throughout the nation pipeline community. The revenue was Rs 2,800 crore which was backed by nearly 100% realisation and nearly 91% of the market gross sales arising so far as the month of June is anxious or on a mean via the quarter. There was 29.2% demand contraction for the trade however for HPCL it was 25.8%. LPG demand was larger and home LPG demand was nearly 24% up in comparison with even final yr.
We did nicely in specialty merchandise, as a result of we might place the merchandise in time when the demand was choosing up. Added to that, as in comparison with earlier quarters, there have been substantial stock losses this quarter. Really, we didn’t endure stock losses. To that extent, it helped us to submit an inexpensive revenue in comparison with the final sequential quarter which was marred by substantial stock losses.
How are demand traits panning out versus final month? What sort of capability utilisations are you working on?
In April, the demand for whole merchandise got here down by nearly 48.5%. It was solely round 50% of what we usually held for a similar interval earlier yr. Then in Might and June, after 20th April, some relaxations have been introduced by the central authorities and a number of the state governments and there have been gradual leisure. So to that extent, the demand in Might picked up at round 77% and in June it got here nearly to 91% general.
If we speak about petrol and diesel, the demand for petrol in April got here right down to round 37%, diesel got here right down to 44%. It picked as much as round 85% in June. In July, petrol demand was nearly 89% of what we noticed in July 2019 and diesel is round 83% of what was there in July 2019. You’ll observe this development nearly yr on yr. Within the second quarter, as soon as the monsoon units in, the demand for diesel falls as a result of agricultural consumption of diesel comes down and even the transportation actions cut back to some extent.
This yr, it was aided by native lockdowns in a number of the cities. There’s additionally a flood in Bihar which can be a consuming space. Structurally, the demand pickup was fairly sharp, going up from 50% to nearly 85%. I don’t see any structural concern to that impact. The seasonal influence is there which ought to once more decide up within the third quarter because the monsoon recedes after which the festivities happen. It should transcend 90% as soon as industrial actions decide up totally and the development actions begin. It should take a while.
Additionally as a result of the aviation sector has not but picked up. The aviation demand is nearly 30-35% of what was there in July final yr. Contemplating the whole lockdown and gradual leisure, it’s fairly an inexpensive pickup in demand and we’re seeing it not solely within the transportation fuels but in addition in different merchandise like lubricants, bitumen, naphtha, gasoline oil and so on.
What sort of traits do you see creating in your GRMs?
The gross refining margin had been subdued over just a few quarters primarily due to the product cracks. The petrol cracks within the present quarter common round $0.5, the best it has gone as much as is $4.99. The bottom it has gone to is minus $5. Final yr, identical quarter it was round $5.75.
For HSD, this quarter’s common is round $3.18. Final yr, in the identical quarter, it was round $10.95. So, there had been stress on the product cracks primarily due to surplus inventories. So until a considerable a part of the stock will get absorbed, the cracks will stay underneath strain. The diesel cracks have began choosing up a little bit bit after demand picked up within the European nations. Gasoline pickup is there however not substantial although there’s a demand decide up within the US.
The second wave of corona has been laborious and that has put some dampeners to that impact. The Singapore benchmark GRMs common round $0.93 minus on this quarter. In comparison with that, the $0.04 which now we have posted is an inexpensive one. In fact in Singapore GRM, it’s identical day crude and identical day merchandise whereas in our case will probably be the precise day crude and precise day product.
So, the stock achieve, loss influence upon ours might be round minus 0.85 and it’s according to the Singapore GRMs and barely higher than Singapore GRMs.
Going ahead, as soon as the inventories of petrol and diesel get absorbed to some extent and the demand decide up occurs, Q3 onward it ought to begin displaying a greater development. So far as crude costs are involved, it has hovered someplace within the $40-45 vary for a while. Within the final two days, it has gone over $44 and that was primarily due to the tightness within the provide aspect and there was a mismatch. So demand picked up faster than folks had anticipated.
In August, there might be some leisure within the provide aspect nearly two million barrels per day and to that impact, crude value ought to stay on this vary.
What about your non-refining margins provided that amongst all of the PSUs, you’re the largest exporter for lubricants?
Now we have bought the largest lube refinery within the nation and we’re additionally the most important marketer of lube within the nation. We had been concentrating on the worth added lubes and actually we do provide base oils to our opponents within the nation. So we began increasing our horizon to international nations and as of immediately, we export lube to round 11 nations and we had exported 3000 plus ton of lube within the quarter which was one of many largest exports of lubes within the nation from OMCs not less than.
So lube has been our shiny inventory whether or not it’s manufacturing, whether or not it’s advertising and marketing and between April and July whole gross sales of lube has crossed the that in the identical interval final yr regardless of the lockdown.
One of many causes was that we had the merchandise in place, We have been in a position to place the non gasoline merchandise additionally correctly. Actually, now we have exported even RPO, MTO and a number of the speciality merchandise throughout this quarter. We did fairly nicely on the non gasoline merchandise as nicely and that has mirrored within the profitability as nicely.
One factor I wish to inform is that within the final quarter, we shifted to the decrease tax regime and you will notice a constructive influence within the PAT/
How are your advertising and marketing margins shaping up and what’s the outlook right here?
The advertising and marketing margins are within the vary of what we usually have. In fact, this quarter has seen ups and downs due to the volatility within the product costs, within the crude costs and that was an irregular quarter however on a mean, we see the development to be within the vary we usually have. As you already know, the advertising and marketing margins get calculated based mostly on sure formulations based mostly on worldwide product costs. We must always handle to have common margins.