HPCL has reported a substantial jump in fourth quarter net profits as the government settled part of the subsidy on retail prices by issuing oil bonds to the marketing companies. Despite the oil bonds, the company has seen significant erosion in bottom line for the full year 2005-06.

For the quarter ended 31 March 2006, HPCL has reported a net profit of Rs2,013.41 crore – an increase of 302.84 per cent over Rs499.8 crore reported for the same quarter of previous year. Total revenues increased 27.37 per cent to Rs21,016.89 crore from Rs16,500.37 crore during the previous year quarter.

Operating profits increased 327.84 per cent to Rs1,952.75 crore from Rs456.42 crore. Operating margins as a percentage of net sales improved to 9.37 per cent from 2.78 per cent.

HPCL received a total of Rs2,344.86 crore as oil bonds from the government to compensate for the under-recovery in sale of refined products. This entire amount has been accounted during the fourth quarter and hence the operating margins are not comparable.

Other income for the quarter increased 54.88 per cent to Rs180.98 crore from Rs116.85 crore during the previous year quarter.

Interest costs for the quarter increased 248 per cent while depreciation charges were lower by 7.08 per cent.

For the full year 2005-06, standalone net profits declined 68.24 per cent to Rs405.63 crore, or Rs11.97 per share, from Rs1,277.33 crore, or Rs37.69 per share. Standalone revenues for the full year increased 18.7 per cent to Rs71,366.37 crore from Rs60,122.9 crore for the previous year.

Operating profits for the full year declined 60.75 per cent to Rs2,052.3 crore from Rs805.62 crore. Operating margins as a percentage of net sales declined to 1.13 per cent as compared to 3.43 per cent for the previous year.

Other income for the full year declined marginally to Rs328.45 crore from Rs329.53 crore.

Interest costs increased 9.44 per cent for the full year while depreciation charges rose 4.65 per cent. As against a tax provision of Rs363.27crore during the previous year, the company wrote back Rs120.53 crore in tax provisions during 2005-06.

Gross refining margins at the company's Mumbai refinery declined to $3.22 per barrel during 2005-06 as compared to $5.6 per barrel during the pervious year. At the Vizag refinery, refining margins were $2.56 per barrel as against $5.06 per barrel during the previous year.

HPCL received a total of Rs3,221.59 crore during 2005-06 from upstream oil companies like ONGC and Gail as subsidy sharing as compared to Rs1,278.34 crore for the previous year. Another Rs435 crore was received from standalone refineries as discount on refined products.

Consolidated net profits for the full year 2005-06 declined 68.07 per cent to Rs452.07 crore from Rs1,415.64 crore for the previous year. Consolidated revenues increased 19.32 per cent to Rs75,652.88 crore from Rs63,404.81 crore for the previous year.