IOC profit before tax falls 83% in Sep quarter on higher inventory losses

State-run Indian Oil Corporation's (IOC’s) profit before tax (PBT) fell by 83 per cent to Rs 814.48 crore for the quarter ending September, owing to higher inventory losses and a decline in refinery margin. It had recorded Rs 4,805.74 crore PBT during the same period last year. 

The company’s net profit was Rs 563.42 crore, as against Rs 3,246.93 crore during the same period in 2018-19. “The decline in profit during the quarter was mainly on account of inventory loss against an inventory gain during the previous year,” said Sanjiv Singh, chairman of IOC, said at a press conference on Thursday. 

The company's inventory loss was seen at Rs 1,807 crore during the quarter, as against an inventory gain of Rs 2,895 crore last year. On the other hand, gross refining margin (GRM) was $1.28 a barrel during the quarter versus $6.79 a barrel a year ago. The GRM during the first half of year 2019-20 was $2.96 a barrel, as compared to $8.45 a barrel in the corresponding period of a year ago. Singh said one major reason for lower GRMs during the current fiscal was due to lower cracks.

During the quarter, the company’s revenue from operations declined by 12.7 per cent to Rs 1.32 trillion, as against Rs 1.51 trillion during the same time a year ago. 

The company sold 44.081 million tonnes of products, including exports, during the first six months of the financial year. IOC’s refining throughput for the six months period was 34.82 mt, while for pipeline network it was 43.6 mt. During the first six months, foreign exchange loss was seen at Rs 1,043 crore.

The IOC chairman indicated that the company’s interests on the upcoming stake sale process by the government in Bharat Petroleum Corporation (BPCL) would depend on the offer by the government.  

“BPCL is a large organisation. It (IOC’s interests) will very much depend on how the whole bundle is being offered,” Singh said, adding that the change in retail policy and the entry of new players would bring fresh changes to the entire business model in the retail segment. 

During the past six months, IOC has seen 9 per cent growth in gasoline, 4.4 per cent in liquefied petroleum gas, and 1 per cent rise in diesel sales.

Singh said demand growth on diesel was low due to monsoon impact during the quarter.

Fuel retail companies in India are gearing up to launch BSVI fuel by April 2020 and the company said refineries like Digboi and Barroni have completely shifted to the upgraded fuel version. 

Other major refineries, including Mathura, Guwahati, and Haldia are expected to go for planned shutdowns between December and February for upgradation. “We will be completely shifting to BSIV fuel much before the deadline,” Singh said.