Lower Crude Prices, Enhanced Efficiency To Drive Growth In H2: Chennai Petro’s H. Shankar

Chennai Petroleum Corp. is poised to see better growth numbers in the second half of the financial year 2024–25 as compared to H1, according to the company’s Technical Director and Managing Director (I/C) H Shankar.

Talking to NDTV Profit, Shankar emphasised that factors like better crude and crack spread prices, as well as better operational capabilities are going to aid the public sector undertaking’s performance.

“The numbers (in Q3) are slightly encouraging now as crude and crack prices are improving now,” he said.

“Despite the crack position, our operational efficiencies will also bring good revenues and we are trying to maximise our value-added products, which will give substantial margins to our overall profitability. I have the confidence to say that H2 will give us much better numbers than H1,” Shankar added.

The Chennai-based petroleum refining company reported a sequential decrease in total income by over 29% to Rs 14,429.11 crore in Q2 as compared to Rs 20,365.28 crore in the preceding three months. Net loss during this period was Rs 634 crore against a profit of Rs 357 crore in the previous quarter.

Explaining the factors that contributed to this performance, the top executive said, “One is the crude prices. You could see that they have been extremely volatile this quarter. From a high of about $84 to about $74 swing we have seen in these last three months, the crude price in the CPCL basket has almost fluctuated by $10,” he said.

Shankar said that the crack spread prices, which is the overall pricing difference between a barrel of crude oil and petroleum products, have also been stagnant and significantly down from what they used to be last year.

“The diesel cracks are hovering around $8–10 during this quarter. Q2 has been disturbing because we have seen single-digit cracks in important areas. These two areas are not in the control of the company,” he said.

However, the Indian Oil Corp. subsidiary is now focusing on increasing operational efficiency to boost margins, Shankar said.

He said that the company has undertaken maintenance work at its refineries. “We had taken two major blocks of our refineries into shutdown and completed all the work now. In that scenario, we look forward to robust performance in Q3 and Q4 because we will be able to do a very high level of operational efficiency and we will bring a lot more reliability to our plant,” he said.

Shares of Chennai Petroleum Corp. closed 3.3% lower at Rs 760 apiece on the NSE against the benchmark Nifty 50's dip of 0.15%.