Indian Oil Corporation’s Q1 profit down by 45%

By: | Updated: August 4, 2017 6:15 AM

Owing to drop in refining margin and inventory loss, state-run Indian Oil Corporation (IOC) on Thursday reported a 45% fall in profit for the first quarter of financial year 2017-18 compared with the same quarter a year-ago.

While gross refining margin of the company was .32 for every barrel of crude oil during the last quarter as against .98 in the year-ago period, the company suffered an inventory loss of `2,033 crore compared with a gain of `3,785 crore during the two quarters, respectively. (Image: Reuters)

Owing to drop in refining margin and inventory loss, state-run Indian Oil Corporation (IOC) on Thursday reported a 45% fall in profit for the first quarter of financial year 2017-18 compared with the same quarter a year-ago. Net profit during the period was Rs 4,549 crore compared with Rs 8,269 crore a year-ago. The company’s revenue for the quarter stood at Rs 1,29,418 crore in the June FY18 quarter compared with Rs 1,07,671 crore in the comparable period a year ago. While gross refining margin of the company was $4.32 for every barrel of crude oil during the last quarter as against $9.98 in the year-ago period, the company suffered an inventory loss of Rs 2,033 crore compared with a gain of Rs 3,785 crore during the two quarters, respectively.

The company also suffered a product loss of Rs 2,009 crore during the quarter compared with a gain of Rs 3,695 crore during the comparable period a year-ago. The oil marketing company sold 20.736 million tonne (MT) fuel in the the Indian market and 1.772 MT overseas during in the quarter ended 30 June 2017. In comparison, IOC sold 20.415 MT domestically and exported 0.963 MT in the same period of 2016-17.

The company took into account for Rs 876.38 crore subsidy support from the government during the quarter for selling kerosene at below-market rate which stood at Rs 6.87 per litre. The company is also suffering as products such as aviation fuel, diesel and petrol are outside the realm of Goods and Services Tax for which it is not being able to claim input credit and the company estimates a loss of R5,000-6,000 crore per year due to this.

“However, we are talking to states if VAT (value-added tax) deferment can be given,” said Sanjiv Singh, chairman, I OC. IOC’s debt at the end of the June 2017 quarter stood at Rs 34,922 crore compared with Rs 54,820 crore at the end of March 2017 quarter. The company is expecting to receive its first crude oil delivery from the US by end of September and will be floating a tender of around 2 million barrels in August for high sulfur US oil.

As reported by FE earlier, the company on Thursday said it has increased dealers’ margins by 9-43% for petrol and 11-59% for diesel depending on the sale volume of a retailers. Outlets selling less fuel will get higher margin compared with those selling higher volumes. The company said a majority of the increase is taking into account the central minimum wages—which has increased by around 50%—for customer attendants at fuel outlets.

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