On the back of compensation from the Central Government, Indian Oil Corporation (IOC) on Thursday reported an over two-fold rise in its net profit at Rs.1,634.76 crore for the third quarter ended December 31, 2010.
Addressing a press conference here, Chairman S. V. Narasimhan said the net profit jumped by 135 per cent in the October-December quarter from Rs.696.59 crore in the same period a year ago. IOC earned $6.33 on turning every barrel of crude oil into petroleum products in the quarter as against a gross refining margin (GRM) of $3.64 a barrel a year ago. “The higher profit is due to compensation we received from the government,” he said.
The government has approved payment of Rs.8,000-crore cash subsidy to IOC and other state-owned fuel retailers to make up for half of the revenues they lost on selling diesel, domestic LPG and kerosene below cost in the third quarter. Out of the total cash subsidy, IOC got Rs.4,442.45 crore, he added.
“For the full year, we estimate a gross under recovery of Rs.42,000 crore for IOC and about Rs.75,000 crore for the industry,” Mr. Narasimhan said.
Even though petrol price had been decontrolled, IOC and other state-owned firms have not passed on the entire impact of spurt in international oil prices to consumers. “We are keeping a watch on prices. We hope price will come down.” “We have not passed on the full burden to consumers,” he said.
IOC's turnover rose by 16.7 per cent to Rs.82,179 crore in the third quarter from Rs.70,431 crore during the same period in the previous year. Mr. Narasimhan said IOC sold 18.422 million tonnes of products, including exports, during the quarter under review.
IOC, he said, absorbed Rs.1,330 crore revenue loss on sale of diesel, domestic LPG and kerosene in October-December after accounting the government compensation and the contribution by upstream firms like ONGC. “No project will be affected because of financial constraints. The company holds Rs. 16,900 crore worth of government bonds, which it can offload in the market to raise money,” he said.
