New Delhi, Jan 30 (PTI) State-owned Indian Oil Corp (IOC) Wednesday reported 91 per cent decline in the third quarter net profit on account of lower refinery margins and inventory losses due to falling oil prices. Also Read - Planning a Trip to Singapore During COVID-19? Now, PCR Test Mandatory on Arrival
The net profit of Rs 716.82 crore, or Rs 0.76 per share, in October-December 2018 was 90.9 per cent lower than Rs 7,883.22 crore reported in the year-ago period, IOC Chairman Sanjiv Singh told reporters here. Also Read - India Challenges Vodafone Arbitration Ruling in Singapore
“The variation is mainly on account of inventory losses which were partly made up from forex gains,” he said. Also Read - Singapore Police Investigates Social Media Posts Supporting Indian Farmers' Protest
As international oil prices slipped from four-year high touched in the early part of October, the company accounted for inventory losses as the value of fuel it held slumped.
IOC suffered an inventory loss of Rs 6,655 crore in October-December 2018 as compared to an inventory gain of Rs 5,220 crore in the corresponding period of the previous fiscal. This was somewhat offset by Rs 2,084 crore gains in foreign exchange, he said.
Inventory loss occurs when a company buys raw material (crude oil in case of a refiner like IOC) at a particular rate from the international market but by the time it is able to transport it to its refineries and convert it into fuel, rates have fallen.
Since refinery-gate prices are fixed at par with prevailing benchmark international rates, a loss is booked. Inventory gain occurs if the reverse happens.
The company earned USD 1.15 on turning every barrel of crude oil into fuel in the quarter ended December 31, 2018, as compared to a gross refinery margin (GRM) of USD 12.32 per barrel in the corresponding period of the previous fiscal year.
Excluding inventory losses, refinery margin was USD 5.12 per barrel in the third quarter as opposed to USD 7.42 a year ago, he said adding the GRMs were higher than Singapore average.
Turnover rose to Rs 1.6 lakh crore from Rs 1.32 lakh crore.
Singh said domestic fuel sales were up 3 per cent to 21.5 million tonne (MT) while its refineries turned almost 19 MT of crude oil into fuel in the quarter. This is in comparison with 18.23 MT crude throughput in October-December 2017.
IOC Director (Finance) A K Sharma said the company’s borrowings went up by Rs 5,000-6,000 crore in the quarter as the government delayed payment of LPG and kerosene subsidy. In all over Rs 16,000 crore is due from the government on account of cooking fuel subsidies.
This delay meant that the company borrowed more and its debt rose to around Rs 62,000 crore at the end of December 31, 2018.
This is published unedited from the PTI feed.