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New Delhi, January 30
State-owned Indian Oil Corp (IOC) today reported 91% decline in the third quarter net profit on account of lower refinery margins and inventory losses due to falling oil prices.
The net profit of Rs 716.82 crore, or Rs 0.76 per share, in October-December 2018 was 90.9% lower than Rs 7,883.22 crore reported in the year-ago period, IOC Chairman Sanjiv Singh told reporters here.
“The variation is mainly on account of inventory losses which were partly made up from forex gains,” he said. 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 $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 $12.32 per barrel in the corresponding period of the previous fiscal year.
Excluding inventory losses, refinery margin was $5.12 per barrel in the third quarter as opposed to $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. — PTI
Quarter 3 numbers at a glance
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