Indian Oil Q1 profit doubles on higher refining margins

Indian Oil Corp, the nation's biggest oil company, on Thursday reported 2.5-fold jump in its June quarter net profit to Rs 6,436 crore as refining margin rose to seven-year high.

It reported net profit of Rs 6,435.70 crore, or Rs 26.51 per share, for April-June quarter of the current fiscal, compared with Rs 2,522.94 crore, or Rs 10.39 a share, in the year-ago period.

Variation in profit is majorly due to higher refinery and petrochemical margins, IOC Chairman B Ashok said. It earned $10.77 on turning every barrel of crude oil into fuel in the first quarter of 2015-16, compared with a gross refining margins (GRMs) of $2.25 per barrel.

GRMs are the highest since June quarter of 2008-09 fiscal when we clocked $16.81 per barrel margin, he said.

"Refinery throughput was 5.5 per cent higher at 13.568 million tonnes. Our refinery margin in the quarter was Rs 6,521 crore as compared to Rs 705 crore in the corresponding period of last financial year. Petochem margin rose to Rs 1,875 crore from Rs 719 crore," he said.

GRMs were higher because of inventory gain of $4.78 per barrel, he said.

Ashok said GRMs were high because of inventory gain as well as better operational performance. There was a total of Rs 3,218 crore of inventory gain, resulting from valuation of oil rising between the time it is bought, processed and sold.

There was an inventory gain of Rs 2,395 crore on crude oil in the first quarter as compared to an inventory loss of Rs 426 crore a year ago.

Also there was an inventory gain of Rs 823 crore on product, up from Rs 589 crore in the first quarter of last fiscal, he said.

He said IOC received most of the revenue loss on sale of public distribution system kerosene and subsidised cooking gas compensated by the government (Rs 1,732.95 crore) and upstream oil firms such as Oil and Natural gas Corp Ltd (ONGC) (Rs 878.84 crore).

Company's borrowings have come down to Rs 52,519 crore as on June 30 from Rs 55,247 crore as on March 31, he said.

Total income from operations fell 19.2 per cent year-on-year (up over 7 per cent sequentially) to Rs 1.01 lakh crore due to fall in crude oil prices.

Other income during the June quarter plunged 80 per cent to Rs 362.4 crore while tax expenses shot up 169 per cent to Rs 2,764.2 crore compared to same quarter last year. Finance costs also slipped 35.2 per cent to Rs 592.2 crore from Rs 913.9 crore.