Mangalore Refinery & Petroleum , a leading Indian oil refining company, has made a significant change in its crude oil procurement strategy. The company has announced that it has stopped purchasing Russian crude oil from the spot market.

Strategic Shift in Oil Procurement

MRPL's decision to cease buying Russian crude oil from the spot market marks a notable operational change for the company. This move could potentially impact the company's supply chain and cost structure, given the volatile nature of global oil markets.

Implications for MRPL

The shift away from Russian crude in the spot market may indicate MRPL's efforts to diversify its oil sources or respond to changing market dynamics. This decision could be influenced by various factors, including:

• Global geopolitical considerations
• Pricing fluctuations in the international oil market
• Compliance with international trade regulations
• Efforts to optimize the company's refining operations

Looking Ahead

As MRPL implements this change in its crude oil procurement strategy, industry observers will be keen to see how it affects the company's operations and financial performance in the coming quarters. The move may also have broader implications for India's oil import patterns and its relationship with various oil-exporting nations.

Investors and stakeholders will likely monitor how this strategic shift impacts MRPL's refining margins and overall business performance in the volatile global oil market landscape.

Mangalore Refinery & Petroleum , a subsidiary of Oil and Natural Gas Corporation Limited, has reported a net loss of Rs 272.00 crores for the first quarter. The company's performance was primarily impacted by a planned plant turnaround and inventory losses resulting from crude price volatility.

Financial Performance

MRPL's revenue for Q1 stood at Rs 20,983.00 crores, reflecting a decrease from the previous year. The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was reported at Rs 218.00 crores. The Gross Refining Margin (GRM) averaged at $3.88 per barrel, down from $4.70 per barrel in Q1 of the previous year.

Operational Highlights

During the quarter, MRPL processed 3.52 million metric tonnes (MMT) of crude and other feedstocks. This volume was lower compared to the previous year, primarily due to the planned plant turnaround. However, the company achieved a record processing of 1.51 MMT in April alone, showcasing the refinery's inherent capacity when all units are operational.

The distillate yield for the quarter was 80.97%, consistent with previous quarters. The company reported a fuel and loss of 11.41%, although the adjusted figure, accounting for the turnaround, was around 10.1%.

Market Context and Future Outlook

Global refining margins showed improvement during the quarter due to supply disruptions and normal demand growth. Refinery closures expected in 2025-26 are anticipated to support crack spreads going forward. However, crude price fluctuations impacted the bottom line in the last quarter.

In the domestic market, diesel demand grew by approximately 2% year-on-year, while gasoline demand remained resilient with around 7% growth. These trends support MRPL's marketing focus in the southern and western parts of the country.

Retail Expansion and Performance

MRPL currently operates 170 retail outlets and plans to add approximately 100 more during the current financial year. The company's retail sales volume for the quarter was 68,000 KL, contributing about Rs 60.00 crores to the margin. MRPL aims to increase its retail sales volume from 230,000 KL in the previous financial year to 300,000-325,000 KL in the current year.

Debt Position and Capital Expenditure

As of the end of Q1, MRPL's gross debt stands at Rs 13,608.00 crores, with a net worth of Rs 12,657.00 crores, resulting in a debt-equity ratio of 1.08x. The company expects this ratio to improve as earnings rebound in the coming quarters.

Capital expenditure for Q1 was Rs 537.00 crores, primarily due to shutdown expenses. The total annual CapEx is expected to be around Rs 1,000.00 crores, including the shutdown expenses already incurred.

Future Prospects

With all units now back in service, MRPL expects the throughput in Q2 to be above 4.3 MMT, with GRMs already showing stronger performance in July. The company is targeting GRMs in the high single-digit range for Q2, supported by stronger middle distillate cracks and internal fuel loss reduction initiatives.

MRPL remains committed to prudent capital allocation, disciplined cost management, and value-accretive growth as it navigates the challenges and opportunities in the refining sector.

Petrochemical Operations

The company's polypropylene plant is operating at 100% capacity, with margins benefiting from direct crude-to-polypropylene production. The aromatic complex is currently running in reformate mode, contributing about $0.50 per barrel to the overall margins.

As the refining industry faces evolving market conditions and regulatory changes, MRPL continues to focus on operational efficiency and strategic growth initiatives to enhance its competitive position in the market.