IOC net profit jumps more than 15 times in Q2 over inventory, forex gains

GRM at $8.62 a barrel during the quarter versus $1.28 a year ago. However, total income drops 13%

State-run Indian Oil Corporation (IOC) on Friday reported more than 15-fold increase in its consolidated net profit to Rs 6,165 crore during the July to September period 2020 as against Rs 370 crore during the same period last year mainly on inventory and foreign exchange gains.

The company’s total income during the second quarter of FY21 dropped 13 per cent to Rs 1.35 trillion from Rs 1.17 trillion in the same period last year.

“During the quarter, inventory gains for the company was seen at Rs 7,400 crore, as compared to an inventory loss of Rs 1,807 crore during the same period last year. Similarly, the quarter saw a forex gain of Rs 672 crore, as against a loss of Rs 1,135 crore last year,” said Sandeep Kumar Gupta, director (Finance) of IOC.

During the quarter under review, the gross refining margin (GRM) was seen at $8.62 a barrel, as against $1.28 a barrel during the July to September quarter of 2019. GRM is what a refiner makes from turning every barrel of crude to fuel.  The company board on Friday cleared investments to the tune of around Rs 5,000 crore, including the clearance for a Rs 1,400 crore lube blending unit in Chennai and Rs 1,200 crore Poly Butadiene Rubber (PBR) Plant at Panipat Naphtha Cracker Complex, that will be completed in 2022.

“We have planned considerable brownfield expansion – including plans in Gujarat, Panipat and Paradip. A good chunk of the Rs 5,000 crore investments cleared today will be coming in the upcoming financial years,” said S M Vaidya, chairman of the company. Its overall debt was seen at Rs 85,600 crore by the end of the July to September quarter.  

The company has achieved a capital expenditure of Rs 7,872 crore or 34 per cent of the planned Rs 23,232 crore for the current financial year during the first six months, braving the pandemic situation.  The company sold 35.403 million tonne (MT) of products, including exports, during the first six months of the financial year.

During the second quarter, the company product sales, including exports, was seen at 18.899 MT. The refining throughput was 13.969 MT and throughput of the company’s nationwide pipeline was 17.347 MT. Vaidya said that the demand for petrol and diesel will come back to the pre-covid levels in the next couple of months.

The petrol sales for April-September 2020 was about 4.91 MT, which was lower by 21.3 per cent as compared to the same period last year. Diesel demand has contracted by 27.6 per cent to 13.14 MT while Jet fuel demand has declined by 68.9 per cent to 0.75 MMT. LPG is the only product to record growth, at 7 per cent, with demand at 6.24 MT during April to August 2020.

“For the current month, it is heartening to see that MS has registered a growth of around 2 per cent and the dip in HSD sales is now about 2.6 per cent only,” Vaidya said.