India’s largest fuel retailer Indian Oil Corporation (IOC) on Friday reported its highest ever net profit in a single year at Rs 10,399 crore in FY16, nearly double the level (Rs 5,273 crore) reported in FY15.
India’s largest fuel retailer Indian Oil Corporation (IOC) on Friday reported its highest ever net profit in a single year at Rs 10,399 crore in FY16, nearly double the level (Rs 5,273 crore) reported in FY15. This is despite its total income from operations dropping by 19.86% to Rs 3,50,603 crore in FY16 against Rs 4,37,524 crore in FY15.
Giving the reasons for highest ever profit, B. Ashok, chairman, IOC, said, “A few significant things have contributed to this — our physical performance has improved, the company has cut down its costs and inventory losses have been less.” However, in the fourth quarter of FY16, IOC reported 80.3% drop in net profit at Rs 1,236 crore against Rs 6,285 crore in January-March 2015. According to Ashok, the fourth quarter net profit were down because it incurred an inventory loss of Rs 3,335 crore in the quarter against R871 crore in the same quarter the previous year.
It impacted its net prfoit by Rs 2,464 crore. At the same time, it booked about R1,494 crore of impairment losses.
Till now, IOC had reported the highest profit of R10,200 crore in 2009-10 when crude oil prices were at peak, said Ashok. The government-owned company has reported a gross refining margin of $5.06/barrel in FY16 against $0.27/barrel in FY15.
The inventory losses in FY16 were down 45.39% at Rs 9,731 crore against Rs 17,822 crore in FY15. The company sold 5.49% more petroleum products in FY16 at 80.7 million tonnes in FY16 against 76.5 million tonnes in FY15. “During state elections also, oil marketing companies have increased auto fuel prices and maintained their marketing margins. Now, there are no major state elections in FY17. Thus, we expect companies will be able to maintain its marketing margin by adjusting auto fuel prices. Current year-to-date margins on diesel and petrol are Rs 1.1 per litre and Rs 2.3 per litre, respectively, which is higher in petrol and flat in diesel on year-on-year basis. We believe given the recent correction in the stock price it is good opportunity again to enter in the (IOC) stock,” said Dhaval Joshi, an analyst at Emkay Global Financial Services.
In FY16, IOC’s refinery throughput stood at 56.694 mt and its pipeline network ferried 79.824 mt of crude oil and