Indian Oil Profits Nearly Doubled

Indian Oil Profits Nearly Doubled

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State-owned Indian Oil Corp (IOC) reported near doubling of its third-quarter net profit on the back of inventory gain arising from the sharp rise in global oil prices and jump in refining margins.

Net profit in October-December this fiscal stood at Rs 7,883.22 crore, or Rs 16.63 per share, as compared to Rs 3,994.91 crore, or Rs 8.43 a share, in the same period a year ago, IOC Chairman Sanjiv Singh stated among media.
The nation’s largest oil firm also declared a 1:1 bonus share (one free share for every existing equity share of Rs 10 each). The Board of Directors also declared an interim dividend of Rs 19 per share.
“The variation in net profit is largely due to higher inventory gains as well as improved operative performance,” he said.
The company booked an inventory gain of Rs 6,301 crore in the quarter ended December 31, 2017, as compared to a gain of Rs 3,051 crore in the same period a year ago.
Inventory gain arise when a company buys crude oil at a particular price but by the time it is able to process it and take the fuel to market, the rates had moved up. International oil prices have risen more than 30 percent since OPEC and non-OPEC producers agreed to limit production from January 2017.
Singh said the company made $12.32 on turning every barrel of crude oil into fuel in the quarter as compared to a gross refining margin (GRM) of $7.67 per barrel in the previous fiscal.
Without the inventory gain, the GRM was $7.42 in October-December as opposed to $5.10 in the previous fiscal.
IOC Director (Finance) A K Sharma said the top line was impacted by about Rs 700 crore due to non-inclusion of crude oil, natural gas, petrol, diesel and ATF in the new Goods and Services Tax (GST) regime.
The company pays GST on inputs but is not able to set the tax off on the final product.
On an annualized basis, the hit would be about Rs 2,000 crore, he said.
“We have requested the government to include petroleum and petroleum products in GST and till such time a mechanism be worked out to compensate us for the tax paid without input set off,” he said.
To begin with, jet fuel or ATF can be included in GST as the volumes are less, Sharma said.
During October-December quarter, revenue was up about 15 percent at Rs 120,865 crore.
IOC refineries processed 11.4 percent more crude oil at 18.23 million tonnes and its pipelines transported nearly 11 percent more oil at 22.42 million tonnes. Fuel sales were up 4.1 percent to 20.9 million tonnes.

Singh said India was witnessing a compounded annual growth rate of 3.5-4.5 percent in fuel demand. LPG, ATF, and petrol were witnessing robust demand, while diesel consumption, rising at 4.5-5 percent, was also very good, he said.
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