Indian Oil Corporation (IOC), on Friday, posted a steep 82.5 per cent drop in net profit for the July-September quarter following foreign exchange losses and receipt of incomplete compensation from government for losses on sale of subsidised petroleum products.

The net profit fell to Rs.1,683.92 crore from Rs.9,611 crore in the same period a year ago.

Addressing a press conference here, IOC Chairman R. S. Butola said the decline in profit was mainly on account of exchange loss of Rs.2,158 crore in the quarter under review as against the exchange gain of Rs.2,289 crore in the corresponding quarter of the previous year. Also, the company had to absorb Rs.413 crore of loss on diesel and cooking fuels.

The company lost Rs.18,291 crore on selling diesel, domestic LPG and kerosene during the second quarter. It got Rs.8,634.14 crore from upstream firms such as ONGC, and another Rs.9,243 crore in cash subsidy from the government. Even after these, it had an unmet revenue loss of Rs.413 crore.

IOC, Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) sell diesel, domestic LPG and kerosene at government-controlled rates which are way lower than the cost. The losses they incur are met through a combination of cash subsidy from the government and assistance from upstream firms like ONGC.

Mr. Butola said the company was at present incurring a loss of Rs.9.58 a litre on diesel, Rs.35.77 a litre on kerosene and Rs.482.50 per 14.2-kg LPG cylinder. “At current prices, IOC will end the fiscal with an under-recovery of Rs.71,200 crore. Industry will have an under-recovery of Rs.135,900 crore,” he said. The profits were also saved by higher refining margin.

IOC earned $7.43 on turning every barrel of crude oil into fuel in the July-September quarter as against a gross refining margin of $6.07 a year ago. Turnover rose to Rs.110,390 crore from Rs.106,001 crore.

Mr. Butola said for the full fiscal [2012-13], IOC had a net loss of Rs.1,409 crore on a turnover of Rs.220,857 crore as compared to a net loss of Rs.12,840 crore on sales of Rs.202,862 crore during the corresponding period in the previous year.

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