State-owned fuel retailer Indian Oil Corporation on Friday reported a 16% fall in net profit at Rs 5,557 crore for the last quarter of 2009-10 that ended on March 31, 2010. Net sales increased to Rs 66,116 crore in the quarter. Selling of cooking and automobile fuel at government determined prices is the prime cause of the fall in net profit.
For the full 2009-10 fiscal, standalone net profit rose two-and-a-half times to Rs 10,221 crore as the government and upstream oil producers compensated most of the under-realisation of revenue due to selling fuel at government-fixed price, IOC said. Net sales for the full fiscal declined by 5% to Rs 2,49,271 crore.
Despite the handsome jump in annual net profit, company officials described it as ?normal? because the previous year was particularly bad. ?In 2008-09, net profit was a meagre Rs 2,950 crore because of inventory losses, foreign exchange losses and high cost of borrowing,? IOC board of directors member VC Agarwal explained to FE. The high inventory loss was on account of oil prices sharply falling by the end of the 2008-09 fiscal. The cost of borrowing in 2009-10 was 5.4% compared to 8% a year ago. Borrowing for the full fiscal stood steady, compared to a year earlier, at Rs 44,566 crore.
IOC said here that during the whole year under review, it received discounts from ONGC, GAIL India and Oil India worth Rs 7,548 crore, while the government approved a budgetary support of Rs 15,172 crore. Of the total under-recovery of 18,063 crore, the company absorbed Rs 3,159 crore.
Average gross refining margins during the year was $4.47 per bbl as against $3.69 a year ago. Consolidated net profit for the whole financial year rose by more than three-and-a-half times to Rs 10,999 crore.
IOC chairman BM Bansal said after announcing the results that the company is preparing a detailed feasibility report (DFR) for setting up an LNG import terminal at Ennore near Chennai.
Bansal said the company plans to spend Rs 13,000 crore in plan and Rs 2,000 crore in non-plan expenditure in 2010-11. The company had invested Rs 12,256 crore last fiscal, mainly in refinery modernisation. The board of directors proposed a dividend of Rs 13 per share for the previous fiscal. ?It is important to maintain profit at Rs 12,000 crore level on sustained basis,? he added.