IOC net jumps 25%, announces 1:1 bonus

By: | Published: August 30, 2016 6:28 AM

State-run oil refiner and marketer IOC on Monday reported its best ever first quarter net profit: the Maharatna reported a 25% jump in net profit in Q1FY17 at R8,269 crore against R6,591crore in the same quarter previous year.

Sanjiv Singh, director for refineries at IOC, attributed the better performance to three reason — inventory gains, better physical performance and improved margins from petrochemical business. (Reuters)Sanjiv Singh, director for refineries at IOC, attributed the better performance to three reason — inventory gains, better physical performance and improved margins from petrochemical business. (Reuters)

State-run oil refiner and marketer IOC on Monday reported its best ever first quarter net profit: the Maharatna reported a 25% jump in net profit in Q1FY17 at R8,269 crore against R6,591crore in the same quarter previous year.

Sanjiv Singh, director for refineries at IOC, attributed the better performance to three reason — inventory gains, better physical performance and improved margins from petrochemical business.

Last month, Mukesh Ambani promoted Reliance Industries, also into petroleum refining business, had reported highest ever standalone profit at R7,548 crore.

The government-owned firm reported inventory gains of R7,479 crore during April-June 2017 which includes R3,785 crore on crude oil and R3694 crore on petroleum products.

This is against an inventory gain of R3,223 crore in the first quarter FY16.

IOC’s margins from petrochemical business improved to R2324 crore in first quarter of FY17 against R1878 crore in the corresponding quarter previous year. The refinery throughput increased by around 18.7% to 16.099 million tonnes in Q1 of current fiscal year against 13.568 million tonnes in the same months last year.

However, the gross refining margins (GRM) dropped marginally to $9.98/barrel during April-June FY17 against $10.77/barrel in the same months last year.

Singh said that the total income reduced to R1,07,201 crore during the first quarter of FY17 against R113743 crore in the same quarter, which is primarily due to drop in international prices. IOC said all of its R1,331.69 crore revenue loss on sale of PDS kerosene during the quarter was reimbursed by the government.The gross debt of the company stood at R39497 crore as on June 30 against R53,404 crore on March 31.

IOC announce bonus

Indian Oil Corporation (IOC) on Monday announced issue of bonus shares to its shareholders in the ratio of 1:1 (one extra share for each share held), subject to the shareholders’ nod.

The bonus issue, the latest in a series of such acts of rewarding shareholders by cash-rich PSUs under a government directive, will reduce the PSU oil marketing company’s capital reserves by R2,427 crore (from around R90,000 crore) with a corresponding expansion of equity capital base.

Recently, fellow oil marketers BPCL and HPCL have also declared fully paid bonus issues.

FE has recently reported that two and half dozen central PSUs were readying bonus issues. Apart from the three downstream oil companies, BHEL, ONGC and NMDC are set to issue bonus shares.

The moves follow the new capital restructuring rules for CPSEs notified by the government in May, which said every PSU “shall issue” bonus shares if its defined reserves and surplus are equal to or more than 10 times its paid-up equity share capital.

The rules, effective FY17, followed the Centre’s thinking that many reserves-rich CPSEs refrained from bonus issues, even as they were not investing much.

While retail as well as other public shareholders of listed CPSEs would gain from this move, the key beneficiary would be the Centre, the majority shareholder. It could monetise the additional shares to boost non-tax revenue at a later stage.

Some of the CPSEs have accumulated huge reserves over the past years.

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