Securing steady supply of power will help MRPL to shrug off a two-year lean patch
Mangalore Refinery & Petrochemicals (MRPL) is looking for a turnaround in the next fiscal year after a tough two-year period, with its top executives pinning their hopes on likely commissioning of some long-delayed projects to drive growth. This could also help the company’s badly-bruised stock price.
MRPL completed its third phase of refinery expansion two years ago, only to realise that a captive power plant needed to run the additional units was not ready. The new units were built to improve the company’s flexibility in processing heavier, but cheaper, crude oil that will help it improve profitability. The refinery units are awaiting the availability of uninterrupted steam and power supplies for carrying out their pre-commissioning and commissioning activities, the company said in its latest annual report released in August.
Things have gradually progressed since then. “The main reason for the delay (in commissioning the new units) was the captive power plant being built by BHEL, which is partially functional now but will take some more time to become fully operational,” said VG Joshi, director of refineries.
Getting a steady supply of power will allow MRPL to go ahead with commissioning its fluidized catalytic cracking unit, delayed coker unit and sulphur recovery unit, which will help it process high TAN and heavy crude, increase distillate yield by upgrading lowvalue naphtha and black oils, produce value-added products like propylene and upgrade its diesel output to Euro III/IV grades.
In will likely bring huge benefits for the company. “The commissioning of these units by January 2014 will add $3 a barrel to our gross refining margins,” said managing director PP Upadhya.
Besides, it will also allow commissioning of its 440,000-tonne-a-year polypropylene unit. “Once these units are up and running smoothly, we will be able to commission the polypropylene unit by around July 2014,” Joshi said. According to him, by March 2014, the units will achieve a 60% utilisation level, which will be scaled up to 100% over two-three months after that. The company also recently commissioned a single-point mooring facility, which will enable it to import crude oil in very large tankers from far off places like West Africa and Latin America.
On an expanded capacity of 15 million tonnes a year, these additional benefits could translate into significant gains on its balance sheet. A $3-a-barrel gain in refining margin would mean an incremental operating profit of . 2,000-2,300 crore on an annualised basis. The delays in project commissioning and ongoing capital expenditure had resulted in the company’s debt-equity ratio shooting up from 0.2 at the end of fiscal 2011 to 1.7 as of September 2013. Its interest burden jumped from 5% of operating profit in fiscal 2011 to 71% in fiscal 2013. Commissioning of these long-delayed projects will help ease the situation.
The stock closed trading Thursday at . 41.25 on the BSE, compared with its 52-week high of . 69.50.
MRPL completed its third phase of refinery expansion two years ago, only to realise that a captive power plant needed to run the additional units was not ready. The new units were built to improve the company’s flexibility in processing heavier, but cheaper, crude oil that will help it improve profitability. The refinery units are awaiting the availability of uninterrupted steam and power supplies for carrying out their pre-commissioning and commissioning activities, the company said in its latest annual report released in August.
Things have gradually progressed since then. “The main reason for the delay (in commissioning the new units) was the captive power plant being built by BHEL, which is partially functional now but will take some more time to become fully operational,” said VG Joshi, director of refineries.
Getting a steady supply of power will allow MRPL to go ahead with commissioning its fluidized catalytic cracking unit, delayed coker unit and sulphur recovery unit, which will help it process high TAN and heavy crude, increase distillate yield by upgrading lowvalue naphtha and black oils, produce value-added products like propylene and upgrade its diesel output to Euro III/IV grades.
In will likely bring huge benefits for the company. “The commissioning of these units by January 2014 will add $3 a barrel to our gross refining margins,” said managing director PP Upadhya.
Besides, it will also allow commissioning of its 440,000-tonne-a-year polypropylene unit. “Once these units are up and running smoothly, we will be able to commission the polypropylene unit by around July 2014,” Joshi said. According to him, by March 2014, the units will achieve a 60% utilisation level, which will be scaled up to 100% over two-three months after that. The company also recently commissioned a single-point mooring facility, which will enable it to import crude oil in very large tankers from far off places like West Africa and Latin America.
On an expanded capacity of 15 million tonnes a year, these additional benefits could translate into significant gains on its balance sheet. A $3-a-barrel gain in refining margin would mean an incremental operating profit of . 2,000-2,300 crore on an annualised basis. The delays in project commissioning and ongoing capital expenditure had resulted in the company’s debt-equity ratio shooting up from 0.2 at the end of fiscal 2011 to 1.7 as of September 2013. Its interest burden jumped from 5% of operating profit in fiscal 2011 to 71% in fiscal 2013. Commissioning of these long-delayed projects will help ease the situation.
The stock closed trading Thursday at . 41.25 on the BSE, compared with its 52-week high of . 69.50.
No comments:
Post a Comment