Oil marketing firm Indian Oil Corporation (IOC) posted a consolidated net loss of Rs 7,783 crore for the quarter ended March on a one-time loss of Rs 11,305 crore.
The company had posted a net profit of Rs 6,005 crore in the corresponding quarter last year (Q4 FY19). The revenue declined by over 3 per cent year-on-year to Rs 1.42 lakh crore during Q4 FY20.
IOC said the company is consistently valuing its inventories at cost or net realisable value (NRV) whichever is lower. For this purpose, NRV is derived based on the actual realisation in the specified subsequent period as per regular practice.
Due to Covid-19 global pandemic and changes in oil market scenario, there was a significant fall in oil prices which lead to write down in the valuation of inventories below cost for the specified period of Rs 6,855 crore.
However, on account of the unprecedented situation of lockdown from March 25 in the country and consequent significant decline in demand for petroleum products, as a one-time measure, a longer time period is considered for better estimation of NRV considering the most reliable evidence available in line with the provisions of lnd AS 2 ‘inventories.’
As a result of considering a longer time period, the write down in valuation of inventories increased to Rs 11,305 crore.
“Considering the nature and size, the total write-down in valuation of inventories of Rs 11,305 crore is treated as an exceptional item in the statement of profit and loss account in the current year,” IOC said in regulatory filings at stock exchanges.