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India’s three state-owned oil marketing companies (OMCs) continue to be hit by inventory losses in the financial year’s third quarter, ended December, from the historic slump in crude oil prices during the period.
The largest, Indian Oil Corporation (IOC), posted a net loss of Rs 2,637 crore, a second straight quarterly loss and more than double the loss of Rs 961 crore in the corresponding quarter of 2013. The other two, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), showed a slight improvement in performance.
“Gross Refining Margin (GRM) for the current period (April-December 2014) is lower mainly on account of inventory valuation loss of Rs 15,017 crore, which translates to $8.37 a barrel,” IOC stated. The firm recorded a negative GRM at $2.37 a barrel in the nine months as against a GRM of $4.97 a barrel in the corresponding earlier nine months.
IOC received discounts of Rs 23,320 crore in April-December 2014 as compared to Rs 25,047 crore in the corresponding nine earlier months on crude oil and products purchased from upstream companies. The discounts made good a part of the under-recoveries on subsidised sales of diesel (up to October 18), cooking gas and kerosene.
During the quarter, the government paid Rs 2,866 crore in cash subsidy. Upstream producers extended assistance of Rs 6,116 crore to make good the losses. IOC’s total income during the quarter dropped 9.5 per cent to Rs 107,984 crore from Rs 119,354 crore during the same quarter of 2013-14.
IOC said owing to non-revision of retail prices in line with global prices and pending the payment of compensation from the government, it suffered net under-realisation of Rs 1,189 crore in the first three quarters of the current financial year on sale of regulated products, as against Rs 8,815 crore in the corresponding period.
BPCL had a net profit of Rs 551 crore for the December quarter, aided by the government with full compensation for losses on fuel sales. The net loss was Rs 1,089 crore in the corresponding period of 2013. The government paid Rs 1,080 crore in cash subsidy; upstream oil producers like Oil and Natural Gas Corporation extended assistance of Rs 2,333 crore to make up for all the losses on selling domestic cooking gas and PDS kerosene at rates lower than cost.
During the quarter, BPCL’s GRMs or earning from turning every barrel of crude oil to finished products stood at $1.54 a barrel against $1.76 a barrel in the earlier corresponding period. It reported Rs 1,600 crore of inventory losses as international crude oil prices slumped. Sales dropped to Rs 57,915 crore from Rs 64,768 crore earlier.
HPCL reported a net loss of Rs 325 crore during the quarter as against a loss of Rs 1,734 crore in the same period of 2013-14. Total income dipped seven per cent to Rs 51,323 crore from Rs 55,637 crore in the corresponding quarter.
IOC’s share price at the BSE exchange closed on Friday at Rs 310.60, down 1.5 per cent from Thursday’s. BPC’s closed at Rs 724.50, up 2.4 per cent, while HPCL’s closed 4.5 per cent higher at Rs 626.60.
