The increase in the oil refining and marketing giant's net gain comes in a year of dwindling refinery margins, as petroleum products prices fell behind the 125 per cent increase in international crude oil prices.

An Indian Oil release says the Rs 505.56 crore net profit for the October to December quarter, up 47 per cent from Rs 344.46 crore in the last quarter of the 1998-99 fiscal, was ``in spite of further tightening of international prices of crude oil.''

The rise in profits was also despite a 44 per cent jump in Indian Oil's expenditure and a more than 100 per cent increase in depreciation, as new refining capacities of the company went on stream. The last quarter alone saw the completion of the three million tonne expansion of the company's Gujarat refinery, the commissioning of two new LPG bottling plants and capacity additions at Indian Oil's Kandla-Bhatinda and Salaya-Mathura crude pipelines.

Between April and December 1999, Indian Oil's expenditure shot up to Rs 62,673.24 crore, from Rs 43,456.04 crore in the first nine months of 1998-99. The company set aside Rs 1,318.95 crore as depreciation charges in the first nine months compared to Rs 614.97 crore in the corresponding period last year.

Compared to the increase in its expenditure and depreciation provisions, the market leader's gross turnover went up by 28 per cent to Rs 66,492.69 crore. Indian Oil's income from sales and operations alone was Rs 66,764.66 crore between April and December, which was also a 28 per cent jump from Rs 46,272.59 crore in the first nine months of 1998-99.

The real boost to the oil giant's balance sheet came from a slight drop in the provision for tax and a 27 per cent drop in interest charges. Indian Oil's interest outgo was Rs 714.96 crore in the three quarters of 1999-2000, compared to Rs 981.90 crore in the first nine months of 1998-99.

After provision for tax and depreciation, Indian Oil's net profit was Rs 2140.13 crore, a 23.7 per cent increase over the corresponding period last year.