IOC net profit leaps 9-fold to Rs 3,683 cr

Written by Press Trust of India | New Delhi | Updated: Aug 1 2009, 03:25am hrs
Indian Oil Corp, the countrys largest oil refiner, on Thursday reported a nine-fold jump in net profit in the first quarter of the current fiscal as it took advantage of falling crude oil prices, making inventory gains.

IOC posted a net profit of Rs 3,682.83 crore in the April-June quarter against Rs 415.13 crore a year ago, chairman Sarthak Behuria told reporters here. This years profit also included that of Bongaigaon Refineries Ltd, which was merged with the company in March.

The fall in international crude oil prices had helped IOC limit its revenue loss on fuel sales, he said. The rise in profitability was mainly due to foreign exchange gain of Rs 391 crore in the quarter and inventory gains of Rs 1,733 crore.

The higher profits are not entirely based on physical operations, IOC director (finance) SV Narasimhan said, adding one-time, non-operational income, such as gains in inventory valuations and currenc, played a big part."

Last year, the company had incurred huge inventory losses on rising international oil prices. IOC's turnover had declined 21.3% to Rs 63,520.62 crore from Rs 80,734.80 crore in the previous year as company realised lower prices on products sold. Behuria said IOC earned $7.36 on processing every barrel of crude oil against a gross refining margin of $16.81 per barrel in Q1 of the previous fiscal.

The companys revenue loss of Rs 229 crore on sale of petrol and diesel in Q1 was met by upstream companies like ONGC by way of discount on the crude it sold to IOC. However, the company lost Rs 2,961 crore on selling domestic LPG and kerosene, which is yet to be compensated by the government. IOC had lost Rs 7,321 crore on fuel sales in the April-June quarter of the last fiscal.

We hope the government will issue us oil bonds for these under-recoveries, Behuria said. He said the company's borrowings had come down from Rs 44,972 crore as on March 31 to Rs 33,678 crore at the end of June 2009.

Its borrowing cost has also come down to around 6% from the high of 14-15% last year. Narasimhan said the companys debt equity ratio currently stood at 0.71:1 against 1.02:1 a year ago.