Indian Oil Corporation (IOC), the nation’s biggest oil firm, on Wednesday reported a better-than-expected net profit of ₹8,781.3 crore in the March quarter, helped by a surge in refining margins as higher crude prices boosted inventory value.
Standalone net profit was ₹8,781.3 crore, or ₹9.56 a share, compared with a loss of ₹5,185.3 crore in the same period a year earlier, IOC Chairman S.M. Vaidya said.
The rise in profitability was due to higher inventory gain and petrochemical margin in the fourth quarter of 2020-21 fiscal, he said.
The company had reported a loss in January-March 2020 owing to inventory losses. Inventory gains are booked when raw material (crude) prices rise by the time a company processes oil into fuel. Losses are booked when the reverse happens. Brent crude prices jumped about 23% during the March quarter.
IOC earned $10.6 on turning every barrel of crude oil into fuel compared with a negative gross refining margin (GRM), or loss, of $9.64 per barrel, he said.
Without inventory gains, GRM for the January-March quarter stood at $2.51 per barrel. Mr. Vaidya said the company earned a record net profit of ₹21,836 crore in the fiscal ended March 31.
The second wave of coronavirus infections has disrupted fuel demand but not to the extent seen in April-June last year, he said.
“Demand destruction is not to that extent,” he said, adding that petrol and diesel sales have fallen 15-20% while ATF demand continued to be half of the pre-COVID-19 levels. The board has declared a final dividend of ₹1.50 per equity share.
Mr. Vaidya said IOC is targeting capital spending of ₹28,847 crore in FY22 compared with ₹27,194 crorethe previous year.