Higher crude prices in the international markets and a delay in the revision of the domestic petroleum product prices has inflicted a severe blow on the profit margins of public sector refineries in the quarter ended March 2004. 
 
For the first time in the last 17 quarters, the seven PSU refineries reported a decline in net profits in the quarter ended March 2004. The aggregate net profit of the seven refineries declined 31 per cent from Rs 7,585 crore (Rs 75.85 billion) in the quarter ended March 2003 to Rs 5,226 crore (Rs 52.26 billion) in the quarter ended March 2004. 
 
International Brent crude oil prices moved from $29.10 per barrel on December 30, 2003 to $33.32 per barrel on March 31, 2004. The prices were at around $27.30 per barrel at the end of September 2003. 
 
The net profit margins (NPM) of these seven companies declined from 8.36 per cent at the end of September 2003 to 7.43 per cent at the end of December and further down to 6.35 per cent at the end of the quarter ended March. 
 
Pure refinery companies such as Bongaigaon Refinery and Petrochemicals and Oil and Natural Gas Corporation were the worst hit compared to companies also engaged in distribution of petroleum products such as Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd and Indian Oil Corporation. 
 
ONGC's quarterly net profit fell 46 per cent to Rs 1,986.36 crore (Rs 19.86 billion) in the quarter ended March 2004. The fall in profits can be traced to a fall in the company's gross sales which were Rs 2,690 crore (Rs 26.90 billion) lower due to the discount passed on to oil marketing firms on sale of crude oil, public distribution system kerosene and domestic liquefied petroleum gas. 
 
The dream run of BRCL ended in the fourth quarter with the company posting a sharp 84 per cent decline in net profit during the March 2004 quarter compared to a stiff 314 per cent rise in net profit in the first three quarters of 2003-04. 
 
IOC's net profit declined 16 per cent from Rs 2,199.65 crore (Rs 21.99 billion) in the quarter ended March 2003 to Rs 1,849.94 crore (Rs 18.49 billion) in the March 2004 quarter. 
 
The company has managed to control the drop in net profits after its received a Rs 1,853.42 crore (Rs 18.53 billion) discount from ONGC and Gas Authority of India as a part of their share of subsidy on LPG and SKO during the year. 
 
HPCL also received Rs 694.57 crore (Rs 6.94 billion) from both these companies as discount on raw material during the year. Due to this HPCL's net profit declined by 17 per cent while BPCL's net profit declined marginally by 7.49 per cent. 
 
Kochi Refineries posted a 28 per cent drop in net profit and Chennai Petroleum Corporation's net profit declined by two per cent. 
 
A downward curve

• For the first time in the last 17 quarters, the seven PSU refineries reported a decline in net profits.
• Aggregate net profit of seven refineries declined 31 per cent from Rs 7,585 crore in the quarter ended March 2003 to Rs 5,226 crore in the quarter ended March 2004.
• The Bongaigaon Refinery and Petrochemicals and ONGC were the worst hit.
• ONGC's quarterly net profit fell 46 per cent to Rs 1,986.36 crore in the quarter ended March 2004.
• BRCL posted a sharp 84 per cent decline in net profit during the March 2004 quarter compared to a stiff 314 per cent rise in net profit during the first three quarters of 2003-04.
• Kochi Refineries posted a 28 per cent drop in net profit and Chennai Petroleum Corporation's net profit declined by two per cent.