Indian Oil Corporation, the country's biggest refining and oil marketing company...
Indian Oil Corporation, the country’s biggest refining and oil marketing company, on Wednesday reported a net loss of Rs 898 crore for the July-September quarter against a net profit of Rs 1,683.92 crore during the same period last fiscal, primarily on inventory losses.
“The loss was mainly due to inventory of Rs 4,272 crore in Q2 compared to an inventory gain of Rs 4,635 crore during the same period of last fiscal,” IOC chairman B Ashok told mediapersons.
FE had reported on October 25 that having stocked up considerable inventories of refined products over the last 15-20 days, the three oil PSUs — IOC, BPCL and HPCL — were staring at the prospect of margins coming under pressure in the short term.
This is because there’s usually a time lag of 30-45 days between crude oil purchases (payments) and the same being fed to the refineries. Crude oil purchased at relatively higher prices — a couple of months ago, the Indian basket of crude ruled at 17% higher — were used to create the present inventories, but firms can now sell them only at the current (reduced) prices, leading to a squeeze on margins.
Brokerage firm CLSA in a recent report said OMCs no more benefit from falling crude price after diesel price deregulation and warned that these companies may have to bear one-time inventory losses as crude falls.
The PSU refiner reported a negative gross refining margin (GRM) of $1.95/barrel against $7.43/barrel in the same quarter last year. This was because global crude oil prices dropped from $111 per barrel in the first quarter of FY15 to $95/barrel on September 30.