HPCL Faces Heavy Losses on LPG Cylinders; Will It Impact the Common Man's Pocket?

HPCL is currently incurring a loss of Rs 245 on the sale of each domestic LPG cylinder—a figure that could rise to Rs 327 by November. This situation raises concerns about a potential impact on the pockets of the common man.

LPG cylinders have become an essential part of kitchens in almost every household today. Given that companies are facing significant losses on the sale of domestic gas cylinders, it is natural for people to wonder: could gas cylinders become more expensive in the near future? Currently, Hindustan Petroleum Corporation Limited (HPCL) is losing Rs 245 on every domestic LPG cylinder sold.

The primary reasons for these losses are high crude oil prices and the ongoing tensions in West Asia. Additionally, rising costs associated with the maritime transport of oil and gas are further increasing the companies' operational expenses. Let’s examine what this might mean for the average consumer.

Why is HPCL incurring losses on LPG cylinders?

Rising crude oil prices in the international market are putting pressure on the costs incurred by oil companies. Consequently, companies are selling domestic LPG cylinders at rates below their market value, leading to losses. According to the company’s Managing Director, Vikas Kaushal, this loss could climb to Rs 327 per cylinder by November. Notably, the company reported a loss of approximately Rs 500 crore in its LPG business during the second quarter (July to September).

Will it impact the common man's pocket?

The losses currently being faced by HPCL do not necessarily mean that the price of domestic gas cylinders will increase immediately. Domestic LPG prices are generally influenced by international market trends, government policies, and the operational costs of oil companies. If crude oil prices and transportation costs remain high for an extended period, the financial pressure on these oil companies could intensify. However, when and by how much the price of a cylinder will change for the general public will depend on the relevant decisions.

What was HPCL’s profit in the second quarter?

Despite losses in its LPG business, HPCL recorded a net profit of ₹3,625.22 crore in the second quarter. For comparison, the company’s profit in the same quarter of the previous year was ₹3,859 crore. Thus, the company’s profit has seen a decline of approximately 6.1% on a year-on-year basis.

Meanwhile, the company’s revenue from operations rose by 26.1% year-on-year to reach ₹1,39,140 crore, compared to ₹1,10,323 crore in the same period last year.