IOC profit doubles to Rs 4,917 cr in Q3 on inventory gains

Indian Oil Corporation (IOC) reported a net profit of `4,916.6 crore on a standalone basis for the quarter ended December 31, recording a 110% rise from the same period a year ago. The state-run oil refining and marketing company attributed the increase in profit to inventory gains, stemming from fluctuations in global oil prices and rising margins of petrochemical products. The company also announced the board’s approval to build a new refinery Nagapattinam in Tamil Nadu, at an estimated gross value of Rs 31,500 crore.

As retail prices of petroleum products are mapped with international rates, a gradual rise of global oil prices in Q3FY21 meant that by the time IOC sold its products after processing crude, retail rates had increased. The inventory gain in the fiscal was Rs 2,360 crore against Rs 1,608 crore a year ago, company sources said. Net profit of IOCL in the quarter would have been higher had its gross refining margin not decreased 11% year-on-year to $2.96/barrel. Owing to rising global crude prices and very high government taxes, petrol and diesel are being sold at record high rates.

IOC sold 23 million tonne (MT) of petroleum products in the quarter, marking an annual drop of 1.6%. “Moving forward, oil demand is expected to rise and be above pre-covid levels in the quarter Jan-Mar 21 and in the next fiscal I expect oil demand to cross FY20 levels,” IOCL chairman, SM Vaidya, said. The company’s revenue in the period inched up 1.2% annually to Rs 1.47 lakh crore, while expenses slipped 1.1% to Rs 1.41 lakh crore. Finance cost fell 52% to Rs 628.6 crore, adjusting foreign exchange gains.

IOCL said that the company’s board has approved the setting up a 9 MT per annum capacity refinery at Nagapattinam. The complex will produce petrol and diesel meeting BS-VI specifications, along with polypropylene. The project will be built jointly with IOC subsidiary Chennai Petroleum Corporation (CPCL), with both the entities investing in 25% stake each in the upcoming refinery. The company is looking for a strategic partner to invest in the remaining stake. Naftiran Intertrade, an affiliate of the National Iranian Oil Company, owns 15% stake in CPCL. IOC’s board on Friday has also declared an interim dividend of Rs 7.50 per equity share.