Chennai Petroleum (500110) Q4 00/01 earnings summary

Executive summary

• FY2000-01 turnover reached a record ₹7,132.62 crore, up 29.34% YoY; PBT fell to ₹147.43 crore from ₹191.68 crore, chiefly on higher interest and full-year DHDS depreciation.

• Refinery operations processed 7.013 million tonnes of crude; strategic priorities centered on productivity, cost control, expansion and readiness for petroleum-market deregulation from April 2002.

• Government of India transferred its 51.81% stake to Indian Oil Corporation on March 29, 2001, making the refining business an IOCL subsidiary.

Financial highlights

• Turnover was ₹7,132.62 crore versus ₹5,514.29 crore in FY1999-2000; gross profit before interest, depreciation and tax rose 6.22% to ₹380.92 crore.

• PBT declined 23.1% to ₹147.43 crore; PAT fell to ₹122.43 crore from ₹143.14 crore, despite a ₹17.40 crore extraordinary item recorded for the Arochem settlement.

• Interest expense increased to ₹131.46 crore from ₹85.98 crore; depreciation and amortisation rose to ₹102.03 crore from ₹80.97 crore.

• Directors recommended a 25% dividend on paid-up capital, with ₹3.78 crore of corporate dividend tax and surcharge; EPS was ₹8.21.

• Reserves rose to ₹1,099.45 crore from ₹1,004.56 crore; internal resources generated were ₹187.22 crore, versus ₹169.76 crore in the prior year.

Outlook and guidance

• Administered pricing was scheduled for complete dismantling from April 2002; controlled-product marketing deregulation was expected from April 1, 2002, increasing exposure to market prices and competition.

• Manali’s 3 MMTPA expansion, approved at ₹2,360 crore, was scheduled for completion by July 2003 and designed to produce fuels meeting Bharat Stage II and Euro III standards.

• Cauvery Basin Refinery capacity expansion from 0.5 to 1.0 MMTPA was expected by Q3 2001; its oil jetty was planned for commissioning in the last quarter of FY2001-02.

• Integrated Refinery Information System implementation was targeted for FY2002-03; blending optimisation was intended to reduce off-spec production and quality giveaway while improving availability and despatch.

• Full production of 0.05% sulphur diesel was expected by end-2001; domestic product demand-supply gaps were expected to widen as capacity additions slowed.