Indian Oil Corporation (IOC), the nation’s biggest oil firm, on Tuesday reported a 31.4 per cent drop in the fourth quarter net profit as record refining margins were wiped away by a margin squeeze in petrochemicals and losses on auto fuel sales.
Standalone net profit of Rs 6,021.88 crore, or Rs 6.56 a share, in January-March, compared with Rs 8,781.30 crore, or Rs 9.56 per share, in the same period a year back, the company said in a stock exchange filing.
Sequentially, the profit was higher than Rs 5,860.80 crore in the previous quarter.
For the fiscal April 2021 to March 2022, IOC posted the highest-ever revenue by any Indian corporate at Rs 7.28 lakh crore or USD 96 billion (standalone). Consolidated revenue, after including earnings of subsidiaries like CPCL, came at Rs 7.36 lakh crore.
Reliance Industries Ltd had earlier this month reported Rs 7.92 lakh crore revenue for the fiscal FY22. This was claimed to be the highest ever by an Indian company but it included GST, which the company collected on behalf of the government on sale of products and is obligated to transfer to the government.
IOC revenues do not contain the GST element.
“IOC reported the highest-ever revenue from operations by any corporate during FY22,” said company director-finance Sandeep Gupta.
For the full fiscal 2021-22 (April 2021 to March 2022), IOC reported the highest ever net profit of Rs 24,184.10 crore, up from Rs 21,836.04 crore last year.
“This is the highest profit by IOC ever,” he said.
For FY22, Reliance had reported a net profit of Rs 60,705 crore.
According to stock exchange filing, IOC made record margins on turning crude oil into fuel but they were wiped away by lower cracks on naphtha as well as losses on petrol, diesel and domestic LPG sales.
IOC earned USD 18.54 on turning every barrel of crude oil into fuel during January-March as compared to USD 10.59 per barrel gross refining margin a year back. After excluding inventory gains arising from processing crude oil bought at lower prices, core GRM in the fourth quarter of 2021-22 fiscal came to USD 13.52 per barrel as opposed to USD 2.51 a year back.
But these gains were done in by fuel marketing losses. IOC and other public sector oil companies held petrol and diesel prices for a record duration despite a surge in the cost of raw materials (crude oil) to a 14-year high. They started raising prices only on March 22.
And even after the Rs 10 per litre increase in petrol and diesel prices between March 22 and April 6, they continue to make losses as international crude oil prices have stated above USD 100 per barrel.
Similar is the story on cooking gas LPG where prices were hiked by Rs 50 per cylinder on March 22, which weren’t enough to cover the gap between the cost of production and sale price.
Another Rs 50 a cylinder increase happened on May 7 but the gap continues.
Pre-tax earnings from the sale of petroleum products fell 8 per cent to Rs 8,251.29 crore while the same from the petrochemicals business was down 72 per cent to Rs 570.18 crore, the filing showed.
With oil prices surging, revenue from operations rose to Rs 2.06 lakh crore in the final quarter of this fiscal year ending March 31 from Rs 1.63 lakh crore a year back.
The Board of the company recommended the issue of bonus shares in the ratio of 1:2 — one new bonus equity share of Rs 10 each for every two existing equity shares.
It also declared a final dividend of Rs 3.60 per equity share (pre-bonus), which translates into a final dividend of Rs 2.40 per equity post-bonus for the financial year 2021-22.
The final dividend is in addition to the interim dividend of Rs 9.00 per share (pre-bonus) paid earlier.
Reflecting on the stellar operational performance of the company, IOC chairman S M Vaidya said, “This year, IndianOil has notched up the highest ever revenue from operations and as well as highest ever net profit.” “This stellar achievement reflects our resolve to set new benchmarks of excellence even in the face of stiff challenges. This also validates our sustained focus on fuelling the socio-economic aspirations of new India,” he said.
He said IOC sold 86.407 million tonnes of products, including exports, during FY 2021-22. “Our refining throughput for FY 2021-22 was 67.665 million tonnes and the throughput of the corporation’s countrywide pipelines network was 83.248 million tonnes during the year.” The gross refining margin (GRM) for FY 2021-22 was USD 11.25 per bbl as compared to USD 5.64 per barrel in the previous financial year. The core GRM or the current price GRM for the year 2021-22 after offsetting inventory gains came to USD 7.61 per barrel.
For the fourth quarter of FY 2021-22, IOC’s product sales volumes, including exports, were 23.310 million tonnes. The refining throughput was 18.265 million tonnes and the throughput of the corporation’s countrywide pipelines network was 22.061 million tonnes during the quarter.