State-run Indian Oil Corporation Limited (IOC) on Tuesday reported a net loss of R329.17 crore during the July-September quarter of FY16. The Maharatna had reported net loss of R898.46 crore in the same quarter previous year.
B Ashok, chairman IOC, attributed the loss of Rs 5,137 crore to inventory losses, which includes Rs 3,352 crore on crude oil and Rs 1,785 crore on petroleum products. “On physical parameters we have done extremely well. On sales we have done well. Capacity utilisation has been good. What has impacted is inventory losses,” the chairman said in a media interaction post its Board meeting.
Inventory loss means the difference between the cost of purchase from supplier and point of sale. Generally, there is a gap of 45 days when IOC buys the crude oil overseas, processes it at its refineries and sells the refined products. In addition to inventory losses, there was a foreign exchange loss of Rs 1,100 crore in the second quarter of FY16 against Rs 672 crore loss in the same quarter of FY15.
This also impacted its gross refining margins (GRM) to meagre $0.90/barrel during the July-September quarter of FY16 against negative $1.95/barrel in the same quarter previous year. If inventory losses were excluded, IOC’s GRM or its earning on turning every barrel of crude oil into fuel would have improved to $6.92/barrel during the second quarter of FY16, Ashok added. “We believe, stock would perform from here as we do not see any negatives which would lead to downgrades in the consensus number for FY16. GRM are on recovery side on winter demand and in Q4 we would expect further improvement in GRM on account of maintenance shut down in major US and European refineries. Moreover, marketing margin will improve post Bihar election,” said a Mumbai-based analyst.
Currently, diesel marketing margin stands at R1.2/litre, while petrol margin stands at Rs 2.9/litre. IOC stock closed at Rs 401.45, 1.18% higher than previous trading session, on the BSE on Tuesday. IOC’s net sales reduced to Rs 85,114.84 crore during the second quarter FY16 against Rs 1,11,304.93 crore in the second quarter last year. The drop in sales revenue is because of fall in prices.IOC’s loses on selling subsidised kerosene and domestic cooking gas were compensated through a cash subsidy of R1,715 crore from Centre and another Rs 462 crore from upstream firms.
During July-September FY16, refinery throughput increased to 13.683 million tonnes compared with 13.407 mt in the same quarter last year. Pipeline throughput was also up at 19.982 mt against 19.039 mt. Sales were up 6% at 18.15 mt, Ashok added.
IOC said that all units of its newly set up 15- mt- a-year refinery at Paradip in Orissa would be successfully commissioned by next month. It targets to add 4 mt to the refining capacity in the current fiscal.