The Hindu Business Line : IOC net profit rises 32% on higher refining margins

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IOC net profit rises 32% on higher refining margins

Company makes forex gains of Rs 1,250 cr during Q2

– Kamal Narang

Making a point: The IOC Chairman, Mr Sarthak Behuria (left), with the Director, Finance, Mr S.V. Narasimhan, at a press conference in the Capital on Tuesday.

Our Bureau

New Delhi, Oct. 30 Indian Oil Corporation Ltd (IOC) has reported a 32-per-cent increase in net profit for the second quarter ended September 30, 2007. The profitability was mainly pushed by increase gross refining margins (GRM), inventory gains, high foreign exchange earnings, marketing margins and better throughput.

IOC reported net profit of Rs 3,818 crore (Rs 2,884 crore) in the quarter of the current fiscal. The net sales were marginally lower at Rs 49,410.98 crore (Rs 49,995.71 crore) during the quarter. Speaking to newspersons, IOC Chairman, Mr Sarthak Behuria, said, “During the quarter, we had inventory gains of Rs 200 crore and foreign exchange earnings of Rs 1,250 crore.” The GRM – revenue earned on processing a barrel of crude oil – rose to $5.91 per barrel during the quarter (negative $ 0.22 per barrel).

For the first half of the current fiscal, IOC reported a 25 per cent increase in net profit to Rs 5,286.16 crore and a revenue rise of 3.9 per cent at Rs 1,12,496.60 crore. Refinery margin during the period was $8.44 per barrel ($3.13 a barrel). “In this period, IOC gained Rs 1,446.82 crore on foreign exchange variation,” Mr Behuria said

However, rising crude prices and petroleum product prices continue to remain a cause of concern, he said. The IOC Chairman said that if the Government does not come out with any other package and if the prices continue the way they are then “next six months does not augur too well. If the current situation continues then IOC may suffer under recovery on sale of petroleum products of about Rs 8,500 crore this fiscal.”

The Government regulates the prices of petrol, diesel, kerosene and liquefied petroleum gas (LPG). “The Indian crude oil basket is at an all time high of $85.87 per barrel. It is a matter of grave concern to us. Of greater concern is the rising prices of products like kerosene which has crossed $100 a barrel and diesel that is at $98.6 per barrel, as this is the price we have to pay refineries but are unable to pass on the same to consumers,” he said.

IOC shares on BSE closed at Rs 467.25 up from pervious day’s close of Rs 448.15.

IOC is currently suffering under recovery of Rs 96 crore on the four petroleum products sale. ``This will rise to Rs 121 crore from November 1 when prices would be calculated on the basis of average of second fortnight of October,'' he said. The state-owned oil marketing companies were losing Rs 3.90 per litre on petrol, Rs 6.22 a litre on diesel, Rs 15.99 per litre on kerosene and Rs 174.17 on every 14.2-kg LPG cylinder.

"These losses could go up to Rs 4.94 a litre on petrol, Rs 6.50 per litre on diesel, Rs 16.42 a litre on kerosene and Rs 207 per cylinder on LPG from November 1, if the current situation remains," Mr Behuria said. During April-September, IOC suffered a net under- realisation on fuel sale of Rs 3,507.74 crore (Rs 3,327.97 crore last year) after considering Rs 6,363.25 crore oil bonds received from the Government and Rs 4,966.08 crore discount received from upstream companies - ONGC, GAIL (India), and Oil India Ltd.

The company also declared a final dividend of Rs 13 per share and an interim dividend of Rs 6 per share for the year ended March 31.