IOC loss at Rs 329 cr on oil price slump

The company suffered loss of Rs 3,352 cr on crude inventories

Indian Oil Corporation (IOC), the nation's largest fuel retailer, today said it has posted a net loss of Rs 329 crore in the second quarter ended September as against a net loss of Rs 898 crore in the corresponding quarter on the back of inventory loses due to crude price slump.

"We had an inventory loss of Rs 5,137 crore during the quarter which hit us quite heavily," IOC Chairman and Managing Director B Ashok said at a post-results media interaction.

The company suffered loss of Rs 3,352 crore on crude inventories apart from losses of Rs 1,785 crore on inventory of products maintained during the September quarter.

In the corresponding quarter last financial year (July-September 2014), the fuel retailer had suffered total inventory losses of Rs 4,272 crore including Rs 3,375 crore on crude oil and Rs 1,897 crore on products. Total income of the company during the quarter also dipped 23% to Rs 85,961 crore.

"The decline in income is attributable to the sharp fall in international crude oil prices witnessed during the quarter. Otherwise, we have reported significant improvement in all the physical performance parameters," Ashok said.

IOC registered a Gross Refinery Margin (GRM) of $0.90 per barrel during the September quarter as against a negative GRM of $1.95 per barrel in the same quarter previous fiscal. Ashok said refinery throughput for the second quarter improved to 13.68 million tonne (MT) from 13.40 MT in the same quarter last fiscal.

The company's domestic sales also increased 6% to 18.148 MT in the three months ended September from 17.126 MT in the corresponding quarter. Lower crude oil prices also eased borrowings leading to a 30% fall in finance cost to Rs 729 crore during the quarter.

The company also informed its Gross Under-Recoveries (GURs) on subsidized sales of petroleum products came down to Rs 2,180 crore. This was compensated by the government in the form of cash subsidy to the extent of Rs 1,715 crore and by upstream companies in the form of discounts of Rs 462 crore during the quarter.

Ashok also said the company's capital expenditure in the first six months of the current fiscal stood at Rs 5,200 crore as against a targeted capex of Rs 5,800 crore during the period. For the full financial year 2015-16, IOC is hopeful of exceeding its capex target of Rs 10,560 crore. Ashok also informed the firm is in talks to take up a stake in Russia's Vankor oilfield but refused to share details.

Commenting on the fuel crisis in Nepal on the back of Medhesi protests, Ashok said IOC hopes to maintain its "strong partnership" with the neighboring nation in the long run even as volumes of exports to Nepal have taken a hit currently. Nepal had last week signed an agreement with China to import petroleum products ending IOC's four decade old monopoly over Nepal fuel trade.

The company's share price at the Bombay Stock Exchange (BSE) today closed at Rs 401.45, up 1.18% as compared to previous close.