Bharat Petroleum Corporation (BPCL) has reduced its capital expenditure in view of reduced project activities and lower profitability. The company will now invest around 20 per cent less as capital expenditure in the current financial year. BPCL spent around Rs 11,000 crore as capital expenditure in FY 2019-20.
BPCL director (finance) N Vijayagopal said, since the lockdown was going on in the country, we have not spent much in April and May. We plan to spend around Rs 8,000-8,500 crore for FY 2021. He said that the company spends 10,000–11,000 crore rupees per year as capital expenditure.
Vijay Gopal said that it is difficult to continue the project (construction) work for the last two months. Which in turn is also affecting plan capital expenditure. "We were forced to reduce it (capital expenditure) as there was no project related activity for two months and we don't know when it would be normal," he said. Despite our best efforts, the project activities did not change the way we operate our refinery and other activities.
He said that the company's expansion plans were also affected due to the loss to BPCL in the March quarter. He said, the slowing of the economy and the lockdown in the country would reduce the activities of the projects this year. Due to our profitability deteriorating, we have also decided not to accelerate expenditure on small projects up to Rs 150 crore. We are only working on urgent small projects.
In the March 2020 quarter, BPCL reported a loss of Rs 1,819.56 crore as against a profit of Rs 3,131.66 crore in the same period a year ago. He said that the company also incurred losses due to losses due to foreign currency fluctuations.
However, BPCL's capital expenditure plans will be reviewed in October and the company will also consider reducing project development costs. "We will do a review in October," the official said.
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