Did falling crude oil prices really help Petrochemical Industries in making windfall gains, or they kept struggling to get
their numbers for survival?
In a lay man language PBT is the total profit
after deducting all expenses made in production and sales of coils, including
promotions etc. PAT is the total profit available to PSUs for planning/ expansion/ investment for next year. It can also give an indication of their risk taking
ability, if the market slips due to some unforeseen situations.
In totality, the profits did not see any jump of astronomical number post BJP era, or even when crude prices are low and oil companies are charging hefty sum from customers. Argument may be they are playing with their balance sheet, but then SEBI, Excise Dept, Audit department of Government of India is there with their vulture’s eyes. At the peak of crude oil prices, oil Industries made good fortunes in 2011, but started sliding to a rock bottom in 2013. They are under recovery mode, I’d say at this juncture, but far behind of their 2010 and before numbers.
The graph is actually surprising. Increase in diesel prices was steep before 2014, despite a stable crude oil prices in international market. NDA government did nothing about it. It let the oil companies decide the market price. The yellow line speaks its movement pattern before 2014 and post 2014.
An RTI by some Mr. Harinder Dhingra of D4A/7, Ph-1, DLF Gurugram, Haryana vide
letter number P-20032/149/2016-PP led Mr. Rohit Dawar (PIO, Addl. Director,
D&ES) to provide the information on International Crude prices and Diesel
rate in Delhi. I have further worked on the data, and tried comparing the
individual Profit Before Tax (PBT) and Profit After Tax (PAT) of some major
Public Sector Units (PSUs) into Oil and Gas who majorly use crude oil.
This RTI image popped into my whatsapp for
more than 8 times, all by believers of some special party and its God. These
made me do some desktop research and write this blog.
I have highlighted columns in BPCL, HPCL
and MRPL. ONGC is going strong, over these years, and impact is minimal,
probably due to their capability to extract crude oil from deep sea. They are
also into other businesses that are equally profitable, so may be impact on one
has been absorbed by other.
In totality, the profits did not see any jump of astronomical number post BJP era, or even when crude prices are low and oil companies are charging hefty sum from customers. Argument may be they are playing with their balance sheet, but then SEBI, Excise Dept, Audit department of Government of India is there with their vulture’s eyes. At the peak of crude oil prices, oil Industries made good fortunes in 2011, but started sliding to a rock bottom in 2013. They are under recovery mode, I’d say at this juncture, but far behind of their 2010 and before numbers.
The graph is actually surprising. Increase in diesel prices was steep before 2014, despite a stable crude oil prices in international market. NDA government did nothing about it. It let the oil companies decide the market price. The yellow line speaks its movement pattern before 2014 and post 2014.
Once I understood that falling crude oil prices and not reducing the diesel / petrol prices with similar ratio, companies actually did not made windfall profits, and these lines were/are just political gimmick by some opposition strategists to defame government, using layman digestible language (accepted by common man, in a negative way!), I tried to look into India's external debt and bank surplus situation. Here is the graph for better understanding.
Try reading the slope of the curve. One can find higher steepness in pre-2014 era than post 2014 era. I am not saying that government has done miracles in 2 years, but it has definitely reduced the debt load on them, which is a good thing going forward. Still 50,000 million USD is a big loan on us. Can anyone imagine! I am barely surviving with a home loan on my head.! Buying crude oils from international market bloats a big hole and increases on international debt, if country is not self sufficient in generating revenues. If imports are more than exports, country has to buy dollars. If exports are more than imports, country earn dollars, and hence in a better position.
The bank surplus data is also equally surprising. This is with understanding of fact that RBI has become more liberal post Modi era and 'repo rate' has been declining giving soaps to common man, and a hole to bank's revenue.
RBI continues to post a growth in revenue, despite weak exports, no international demand. That is a commendable thing, one must appreciate. Please note these values are pre-demonetization period figures. One can easily imagine the figure of 2016, post demonetization, the surplus received by all banks shall give a steep increase on the number mentioned here.
In all probability, RBI shall further reduce the repo rate, giving more soaps to common man and Industries. I could understand that government is doing its job in good spirits, but people in opposition are in no mood to accept the change, accept the development, and hence they coin really cool phrases, words and sentences to confuse and instill fear among common man.
It is for us to analyse the charts available in public domain and make judgement. Decisions on hearsay and some whatsapp/social media chat should be avoided by educated society.
