Indian Oil's net dips 82.5% on forex losses, subsidy

State-run Indian Oil Corporation has had an 82.5 per cent drop in net profit for the second quarter of this financial year to Rs 1,684 crore, as against Rs 9,611 crore during the same period in 2012-13.   

"The major reason was due to a foreign exchange loss of Rs 2,158 crore and also unmet revenue loss due to non-payment of compensation by the government on under-recovery during the quarter,” said R S Butola, chairman.

The total income from operations for the quarter zoomed 4.1 per cent to Rs 110,390 crore, compared to Rs 106,001 crore during the same period in 2012-13.  

The loss in diesel sales was Rs 18,291 crore during the quarter. “Out of this, Rs 8,634 crore was from upstream companies and Rs 9,243 crore was the government share. Still, we had a revenue loss of Rs 413 crore,” Butola added.

The under-recovery on diesel that the oil marketing companies are suffering is Rs 9.58 a litre. On kerosene, it is Rs 35.77 a litre and on domestic LPG (cooking gas) at Rs 482.5 a cylinder. OMCs are now incurring a combined daily under-recovery of about Rs 420 crore on the sale of these three fuels.

"We expect the under-recovery for IOC to touch Rs 71,200 crore, while that of the industry would be Rs 135,900 crore,” said Butola. For the second quarter, the gross refining margin was $7.43 a barrel, as compared to $6.07 a barrel during the same period last year. The average GRM for April-September was $5.19 a barrel.  During April to September, IOC got budgetary support of Rs 13,505 crore.  

The company says its Rs 30,000-crore Paradip refinery project would be in place only by  April-May 2014, against the earlier plan of commissioning it this financial year. “This is mainly due to Cyclone Phailin that hit Odisha. For more than a month, construction works were stopped in Paradip,” said Rajkumar Ghosh, director (refineries).

Butola said the company was open to giving a stake in the project to foreign entities. Saudi Aramco and Kuwait Petroleum Corporation were in talks in this regard. However, IOC is yet to get the environment clearance for evacuation pipelines and dredging.

“This will not be a major issue, as the plant will not be running in its full capacity initially. More, our marketing team is ready with alternative arrangements,” said Butola. The Iraqi government had also recently showed interest for participating in the project.