IOC net rises 17% on higher refinery margins

New Delhi: State-owned Indian Oil Corp (IOC) Friday reported a 17 percent rise in its fourth-quarter net profit as inventory and foreign exchange gains neutralised lower refinery margins.

The net profit of Rs 6,099.27 crore, or Rs 6.46 per share, in January-March 2019 was 16.88 percent higher than Rs 5,218.10 crore, or Rs 5.51 per share, reported in the year-ago period, IOC Chairman Sanjiv Singh told reporters here.

"The variation is mainly on account of inventory gains and product cracks," he said.

As international oil prices fluctuated, the company accounted for inventory gains.

IOC had an inventory gain of Rs 2,655 crore in January-March 2019 as compared to an inventory gain of Rs 4,172 crore in the corresponding period of the previous fiscal. Also, there was an foreign exchange gain of Rs 837 crore as compared to a forex loss of Rs 676 crore a year back.

Inventory gain 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 gone up.

Since refinery-gate prices are fixed at par with prevailing benchmark international rates, a gain is booked. Inventory loss occurs if the reverse happens. ?

The company earned USD 4.09 on turning every barrel of crude oil into fuel in the quarter ended March 31, 2019, as compared to a gross refinery margin (GRM) of USD 9.12 per barrel in the corresponding period of the previous fiscal year.

Turnover rose to Rs 1.44 lakh crore from Rs 1.36 lakh crore.

Singh said domestic fuel sales were up 4.1 percent to 21.66 million tonnes (MT) while its refineries turned almost 17.35 MT of crude oil into fuel in the quarter. This is in comparison with 17.15 MT crude throughput in January-March 2018.

IOC Director (Finance) A K Sharma said the company's borrowings went up as the government delayed payment of LPG and kerosene subsidy. In all over Rs 19,000 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 Rs 86,359 crore at the end of March 31, 2019 which was higher than Rs 58,030 crore as on March 31, 2018.

For the full 2018-19 fiscal, IOC reported a 21 percent dip in net profit to Rs 16,894.15 crore when compared with Rs 21,346.12 crore net profit in the previous financial year.

Turnover however rose to Rs 6.05 lakh crore from Rs 5.06 lakh crore in 2017-18.