Mangalore Refinery hits record highs but faces a profit crisis – What you need to know

Mangalore Refinery and Petrochemicals Limited (MRPL), a subsidiary of ONGC, reported its financial results for the first quarter of FY 2024-25, showing substantial revenue growth but a sharp decline in profitability. The Company’s revenue from operations surged to ₹27,289 crores, up from ₹24,825 crores in the corresponding quarter of FY 2023-24.

In a landmark achievement, Mangalore Refinery and Petrochemicals recorded its highest ever monthly crude processing in May 2024, handling 1,593.2 Thousand Metric Tons (TMT), surpassing the previous high of 1,557.3 TMT set in January 2016. Additionally, the Company achieved a record in Aviation Turbine Fuel (ATF) dispatches with 230.416 TMT in May 2024, exceeding the prior record of 227.515 TMT set in February 2024.

Mangalore Refinery and Petrochemicals also marked significant milestones by processing VARANDEY crude from Russia, EOCENE crude from Saudi-Kuwait Neutral Zone, and KALININGRAD crude from Russia for the first time. Notably, June 2024 saw the highest ever crude processing for the month at 1,474.34 TMT, surpassing the previous record of 1,463.3 TMT from June 2015.

Despite these operational successes, MRPL’s financial performance for Q1 FY25 reveals a notable decline in profitability. The Company’s Profit Before Tax (PBT) dropped significantly to ₹101 crores, compared to ₹1,559 crores in Q1 FY 2023-24. Similarly, the Profit After Tax (PAT) fell to ₹66 crores from ₹1,013 crores in the previous year.

The Gross Refining Margin (GRM) for the quarter was recorded at US$ 4.70 per barrel, a considerable decrease from US$ 9.81 per barrel in Q1 FY 2023-24. This decline in GRM reflects the broader challenges facing the refining sector, including fluctuating crude oil prices and increased operational costs.

Standalone Performance:

– Throughput (Crude + Others): 4.35 Million Metric Tons (MMT) compared to 4.36 MMT in Q1 FY 2023-24.

– Revenue from Operations: ₹27,289 crores, up from ₹24,825 crores.

– Exports (Including Deemed Exports): ₹7,564 crores, up from ₹6,907 crores.

– EBITDA: ₹650 crores, a sharp decrease from ₹2,120 crores.

– PBT: ₹101 crores, compared to ₹1,559 crores.

– PAT: ₹66 crores, down from ₹1,013 crores.

– TCI: ₹64 crores, compared to ₹1,012 crores.

Consolidated Performance:

– PAT (Attributable to Owners of the Company): ₹73 crores, down from ₹1,015 crores.

– TCI (Attributable to Owners of the Company): ₹72 crores, compared to ₹1,015 crores.

During the Board of Directors’ 264th meeting held on July 22, 2024, the Company’s management acknowledged the record-breaking operational achievements while expressing concern over the substantial decline in profitability. The significant drop in GRM and net profit was attributed to various factors, including higher input costs and market volatility. Despite these challenges, Mangalore Refinery and Petrochemicals remains committed to enhancing its operational efficiency and managing financial performance effectively.

The financial results of Mangalore Refinery and Petrochemicals for Q1 FY25 highlight a mixed performance. On one hand, the Company has demonstrated remarkable operational efficiency with record-breaking crude processing and ATF dispatches. On the other hand, the substantial decline in profitability underscores the impact of volatile market conditions and rising costs. Moving forward, MRPL’s ability to navigate these challenges will be crucial in sustaining its operational success and improving financial outcomes.