Net profit declined to Rs 9,389.85 crore in the January-March quarter from Rs 14,512.81 crore in the same period a year ago, the company said in a statement here.
IOC, which owns eight refineries, earned USD 2.17 on every barrel of crude oil turned into fuel as against a gross refining margin (GRM) of USD 3.33 per barrel in Q4 of 2012-13.
The company had got a lump sum cash subsidy for more than one quarter in January-March of 2013.
Retailers such as IOC sell diesel and cooking fuels LPG and kerosene at government-controlled rates, which are below cost.
The difference, called under-recoveries, is made good through a combination of cash subsidy and assistance from upstream oil and gas producers, including Oil & Natural Gas Corp. While the upstream firms make quarterly payments, the government subsidy is not that regular and is often clubbed for more than one quarter.
IOC said it got Rs 37,182.77 crore from the government as cash subsidy and Rs 34,673.59 crore from upstream firms, which were not sufficient to cover Rs 72,938.45 crore of losses on fuel sales. It absorbed losses of Rs 1,082.59 crore.
The company, which posted losses in two of the previous three quarters after not getting timely subsidy, reported an annual net profit of Rs 7,019.09 crore for 2013-14, up from Rs 5,005.17 crore in 2012-13.
It suffered a foreign exchange loss of Rs 3,190.92 crore in the previous financial year.
IOC's GRM was USD 4.24 per barrel in 2013-14, up from USD 3.16 in the previous year.
Sales increased to a record Rs 4,73,210.09 crore, making IOC the largest company in India by turnover. In 2012-13, the company had a turnover of Rs 4,47,096.25 crore.