IOC net dips 82% in Q2 on forex losses, subsidy
New Delhi: State-owned Indian Oil Corp (IOC) on Friday reported 82.5 percent drop in net profit for the July- September quarter due to foreign exchange losses and the government not fully compensating it for losses on fuel sales.
Net profit fell to Rs 1,683.92 crore during the second quarter of the 2013-14 fiscal, from Rs 9,611 crore in the same period a year ago.
"The decrease in profit is mainly on account of exchange loss of Rs 2,158 crore in the quarter, as against the exchange gain of Rs 2,289 crore in the corresponding quarter of the previous year," IOC Chairman R S Butola told reporters here.
Also, the company had to absorb Rs 413 crore of loss on diesel and cooking fuels.
The company lost Rs 18,291 crore on selling diesel, cooking gas (LPG) and kerosene during the second quarter. It got Rs 8,634.14 crore from upstream firms like ONGC and another Rs 9,243 crore in cash subsidy from the government.
Even after these, it had an unmet revenue loss of Rs 413 crore, Butola said.
IOC and other state-owned fuel retailers Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) sell diesel, domestic LPG and kerosene at government controlled rates which are way lower than the cost. The losses they incur are met through a combination of cash subsidy from the government and assistance from upstream firms like ONGC.
Butola said the companies currently incur Rs 9.58 per litre loss on diesel, Rs 35.77 a litre on kerosene and Rs 482.50 per 14.2-kg LPG cylinder.
"At current prices, IOC will end the fiscal will an under-recovery (revenue loss) of Rs 71,200 crore. Industry will have an under-recovery of Rs 135,900 crore," he said.
The profits were also saved by higher refining margin. IOC earned USD 7.43 on turning every barrel of crude oil into fuel in July-September quarter as against a gross refining margin of USD 6.07 per barrel a year ago.
Turnover rose to Rs 110,390 crore in July-September quarter from Rs 106,001 crore in the same period last fiscal.
Butola said for the full fiscal, IOC had a net loss of Rs 1,409 crore on a turnover of Rs 220,857 crore as compared to a net loss of Rs 12,840 crore on sales of Rs 202,862 crore during the corresponding period in the previous year.