IOC logs net profit of ₹8,781 cr in Q4

New Delhi Indian Oil Corporation (IOC), the nation's biggest oil firm, on Wednesday reported a better-than-expected net profit of Rs 8,781.30 crore in the March quarter, helped by a surge in refining margins as higher crude prices boosted the inventory value.

Standalone net profit in January-March was at Rs 8,781.30 crore, or Rs 9.56 a share, compared with a loss of Rs 5,185.32 crore in the same period a year back, IOC Chairman SM Vaidya said. The rise in profitability was due to higher inventory gain and higher petrochemical margin in the fourth quarter of 2020-21 (April to March) fiscal, he said at a conference call with reporters. 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 per cent during the March quarter.

IOC earned $10.6 on turning every barrel of crude oil into fuel as compared to a negative gross refining margin (GRM), or loss, of $9.64 per barrel, he said. Much of these margins are on account of inventory gains. Without inventory, GRM for the January-March quarter stood at $2.51 per barrel. Vaidya said the company earned a record net profit of Rs 21,836 crore in the fiscal year ended March 31, 2021.

The second wave of coronavirus infections has disrupted fuel demand but not to the extent seen in April-June last year, he said. "Demand hasn't dropped to that extent," he said referring to fuel demand falling by a record 49 per cent in April 2020 and by a fifth in the next month. The nation was under complete and stringent lockdown during April-June last year. This year, there is no nationwide lockdown and states have imposed less stringent curbs to check the spread of Covid-19. "Demand destruction is not to that extent. It is very much there but not to that extent," he said adding petrol and diesel sales have fallen 15-20 per cent while jet fuel (ATF) demand continues to be half of the pre-Covid levels.

The fall in demand has led to companies cutting refinery run-rate. IOC ran its refineries at 49 per cent capacity in April last year and at 67 per cent in the following month before hitting a 90 per cent run-rate in June 2020, he said. The average run for April-June was 69 per cent of the capacity and the throughput had hit 94 per cent in January-March. In April, it was 96.1 per cent and to 84 per cent in May so far, he said.

"We hope it continues at this level for some time," he said. "When demand will return to normal levels is difficult to state." IOC reported revenue from operations of Rs 5,14,890 crore for the year April-March 2021 as compared to Rs 5,66,354 crore in the corresponding financial year 2019-20.