IOC's Q1 profit jumps eight-fold, as under-recoveries dip

Indian Oil Corporation, the country’s largest oil marketing company, has seen a 787 per cent jump in its first-quarter profits, due to lower under-recoveries, and gains on account of product inventory and foreign exchange.

Net profit for the quarter ended June 30 was Rs 3,682.8 crore, while net sales slipped 22.2 per cent to Rs 57,935 crore on lower product prices. The gross refining margin during the quarter was $7.36 a barrel vis a vis $16.81 last year.

The company had an inventory gain of Rs 1,733 crore during the quarter, while another Rs 391 crore came on account of forex gains. The outgo on interest is Rs 334 crore vis a vis Rs 614 crore for the previous year’s corresponding quarter.

“But for these factors, the profits would have been much lower,” said chairman Sarthak Behuria, adding that the low crude oil prices has had a very positive impact on oil marketing companies.

On account of subsidised sales of kerosene and LPG cylinders, the company incurred an under-recovery of Rs 2,961 crore for the quarter, as compared to Rs 7,321 crore in the corresponding quarter last year. The under-recovery of Rs 229 crore on petrol and diesel sales has been compensated by the discounts from upstream companies like ONGC.

The debt-equity ratio improved to 0.71:1 as compared to 1.02:1 in the quarter ending March 31. The borrowings have also come down to Rs 33,678 crore on June 30 from Rs 44,972 crore on March 31.