Petroleum refineries company Mangalore Refinery and Petrochemicals Limited (MRPL) is looking to capture revenue available in the market as the Singapore gross refining margins (GRMs) are at an all-time high, the firm’s managing director M Venkatesh said on Wednesday.

“The Singapore GRM is at a nearly all-time high. It's in the range of $17-18 per barrel. It means a lot for a standalone refinery like us. We need to capture the revenues available in the market. Going forward $1 per barrel GRM means Rs 700-800 crore revenue on a peak capacity basis. It's roughly about 20-25 percent of our revenue cap”,” Venkatesh explained in an interview with CNBC-TV18.

He pointed to product demand picking up post the COVID-19 pandemic as the economy has reopened but the supply is becoming tight. MRPL’s inventory gains are largely a book value, Venkatesh said.

“The light distillate stocks globally are low, middle distillate stocks globally are low. ATF, air travel is picking up, so it's all positive signs for standalone refineries like us,” he said.

“Rising crude price and rising product price always generate some cash revenue for us while the falling prices have a detrimental effect. So yes, the inventory gains can be booked, it's a book value, but operating on 2-3 month horizon, rising prices always tending to be beneficial,” he explained

The firm’s standalone debt stands at Rs 14,000 crore and the consolidated debt is at Rs 21,000 crore. It is looking at plans aimed at reduction of the debt and generation of cash profit.

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MRPL has commissioned BS-VI project recently, Venkatesh told CNBC-TV18, and that the firm doesn’t need a big capex in the near term. He added that there could be a debt reduction of Rs 2,000-3,000 crore if Singapore GRMs hold at $10-15 per barrel.

For the entire interview, watch the accompanying video

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