IOC profits fall 80% in March quarter

However, net profit doubles for FY16; optimistic outlook on margins

Indian Oil Corporation reported an 80 per cent fall in profits in the March quarter, the final one for 2015-16, to Rs 1,236 crore, from Rs 6,285 crore during the corresponding period a year before. Income from operations declined 14.2 per cent to Rs 80,450 crore.

The company also took an impairment charge in the exploration and production business.

“We suffered a substantial inventory loss of Rs 3,335 crore during 2015-16. In 2014-15, it was Rs 871 crore. This impacted our profits significantly,” said B Ashok, chairman and managing director.

The Gross Refinery Margin (GRM) for 2015-16 was $5.06 per barrel, against $0.27 per bbl during 2014-15. In the March quarter, it was $3 per bbl as against $8.77 a year before.

Ashok said the company was witnessing impairment of mostly upstream (exploration and production) assets and Rs 1,498 crore had been written off in the books.

For the year ending March, it doubled net profit to Rs 10,399 crore from Rs 5,273 crore for the year ended March 2015. Total income fell 19.2 per cent to Rs 352,849 crore in FY16. "The profit in 2015-16 is the highest ever and better than the Rs 10,200 crore profit in 2009-10," he said. The profit was aided by sharp drop in revenue loss or underrecoveries on sale of cooking gas and kerosene because of the crash in international crude oil prices.

Due to the declining crude prices, IOC said the discount from upstream operations fell to Rs 863 crore in FY16 from Rs 23,597 crore during FY15.

Compensation from the government also decreased to Rs 7,748 crore during FY16 from Rs 38,557 crore in FY15. Oil marketing companies sell kerosene and cooking gas at rates below the global parity price. This loss is shared by upstream oil and gas producing companies and the government.

Turnover dipped 11.4 per cent to Rs 450,738 crore. Underrecoveries dropped to Rs 7,757 crore in 2015-16 from Rs 39,758 crore in 2014-15. Upstream companies contributed around Rs 9 crore.

IOC said debt had come down to Rs 52,469 crore at end-March from Rs 55,248 crore a year earlier.

The company said despite indications of crude oil prices going above $50 a barrel, its margins and retail prices would be in a safe spot. “Whatever is the indication on the prices, the supply is robust and more than the demand. No major economy, apart from India and some other countries, is growing,” said Ashok.

Total sale, including exports, was 80.7 million tonnes for 2015-16. Capacity utilisation in refining was a record high of 103.7 per cent, said the company.