Subsidy relief pushes up IOC's Q4 profit

Company will invest Rs.56,200 crore in the XII Plan

R. S. Butola (right), Chairman, with P. K. Goyal, Director Finance, IOC, addressing a press conference in New Delhi on Monday. Photo: Shanker Chakravarty

Indian Oil Corporation, riding on the back of Rs.45,484 crore subsidy for selling diesel and domestic LPG below cost, trebled its profits in the March quarter.

IOC's net profit rose to Rs.12,670.43 crore in the January-March quarter from Rs.3,905.16 crore, a year earlier, IOC Chairman R. S. Butola told journalists at a press conference here.

Mr. Butola said IOC got Rs.45,484 crore subsidy from the government to make up for losses it incurred on sale of diesel, domestic cooking gas (LPG) and kerosene below cost during 2011-12. Of this, Rs.20,800 crore came during the fourth quarter.

The company had lost Rs.75,469 crore on selling diesel, domestic LPG and kerosene at government controlled rates in 2011-12. Of this, the upstream oil companies such as ONGC gave Rs.29,961 crore. After the government subsidy of Rs.45,486 crore, the company had to absorb just Rs.22.37 crore loss on sale of these products.

Dividend

The company declared a dividend of Rs.5 per share of Rs.10 each for 2011-12. In 2010-11, it paid a dividend of Rs.9.50 per share.

“Besides the under-recovery on diesel, LPG and kerosene, we lost Rs.2,236 crore on petrol. This loss is not made up by the government because the product is deregulated,” he said.

Mr. Butola said the net profit in 2011-12 fell to Rs.3,954.62 crore from Rs.7,445.48 crore in the previous year. This was also due to a one-time outgo of Rs.8,175 crore towards payment of entry tax on crude oil to Uttar Pradesh.

Also, the company had an interest cost outgo of Rs.5,591 crore in 2011-12 as compared to Rs.2,630 crore in the previous year, he said.

IOC's borrowings rose to about Rs.88,000 crore from Rs.52,734 crore as on March 31, 2011.

The company earned $4.25 on turning every barrel of crude oil into fuel in the fourth quarter ended March 31, 2012, as opposed to $7.56 a barrel gross refining margin (GRM) a year ago. In the full fiscal, GRMs stood at $3.63 per barrel as compared to $5.72 a barrel in 2010-11.

Mr. Butola said the company would invest Rs.56,200 crore in the XII Plan.