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IOC posts 85.5% rise in Q4 profit on back of inventory gains

Net profits for the January-march quarter stood at Rs 3,720.62 cr

Shine Jacob  |  New Delhi 

Indian Oil Corporation, IOCL, IOC
Indian Oil Corporation logo outside a fuel station in New Delhi. (Photo: Reuters)

State-run Corporation has posted an 85.5 per cent increase in net profit for the quarter to Rs 3,721 crore, against Rs 2,006 crore during the same period last year, mainly owing to higher inventory gains. 

The company has also posted a 25 per cent rise in total income from Rs 99,461 crore, against Rs 1,24,345 crore. For the full financial year 2016-17 (FY16), IOC’s net profit rose 70 per cent to Rs 19,106  crore. It was Rs 11,242 crore in FY16. 

“The major reason for the zoom in quarterly and annual profit was due to the higher inventory gains that we got. We had an inventory gain of about Rs 2,634 crore during the fourth quarter against an inventory loss of Rs 3,417 crore during the January-quarter last year,” said B Ashok, chairman of IOC. For the company, the average gross refining margin for the financial year stood at $7.77 per barrel against $5.06 per barrel in 2015-16.

The board has recommended a final dividend of Rs 1 per equity share, in addition to the interim dividend of Rs 18 per equity share paid during the year. 

For the FY17, IOC sold 83.5 million tonnes of products, including exports. While the company’s refining throughput for FY17 stood at 65.2 mt, the throughput of pipeline network was at 82.5 mt during the same period.  

GST impact

According to the company, the decision to keep crude oil, natural gas, petrol, diesel and aviation turbine fuel (ATF) out of goods and services tax (GST) purview is expected to hit them by at least Rs 5,000 crore. 
“Because of the exclusion of these products from GST, we will suffer an additional cost of Rs 5,000 crore, as 70 per cent of our products will come outside the GST ambit,” said A K Sharma, director (finance). The petroleum products outside GST will come under the current taxation structure, including excise duty, central sales tax and state value added tax. At one hand, while they will have to pay 18 per cent GST on procurement of various goods, it will not be able to claim input tax credit on the products that they sell. According to industry estimates, the overall GST impact on petroleum sector will come to the tune of Rs 25,000 crore. 

Meanwhile, IOC has lined up a capital expenditure of Rs 20,736 crore for FY18, against Rs 1,4359 crore in FY17, excluding the Rs 6,400 crore spend on the acquisition of Vankor block in Russia.