Indian Oil Corporation (IOCL) reported a net profit of Rs 1,910.8 crore on a standalone basis for the quarter ended June 30, recording a 46.9% drop from the same period a year ago. The state-run oil refining and marketing company attributed the fall in profit to inventory losses, stemming from fluctuations in global oil prices.
The inventory loss in the quarter was Rs 3,196 crore against gains of Rs 2,362 crore in the corresponding period a year ago, said IOCL chairman SM Vaidya.
Prices of the Indian basket of crude in the quarter touched ultra-low levels of $16.2/barrel, lowering the valuation of the crude oil stocked by the company, leading to inventory losses of $3.05/barrel. However, the net profit of IOCL would have been lower had its gross refining margin not increased 88% year-on-year to $4.27/barrel, thanks to the continuous rise in retail prices of petrol and diesel in the last month of the quarter, when demand for auto fuels revived with the gradual lifting of the lockdown to contain the coronavirus outbreak.
IOCL was more hurt by coronavirus in the preceding quarter, when it recorded a loss of Rs 5,185.3 crore, dragging down the overall FY20 profit by 92% annually to Rs 1,313.2 crore. The company sold 16.6 million tonne (MT) of petroleum products in Q1FY20, marking a substantial drop of 27% mainly due lower transportation activities in the first two months of the corona quarter when retail fuel prices were unchanged.
IOCL said that the company’s board has approved the implementation of an integrated para-xylene (PX) and Purified terephthalic acid (PTA) complex project at its Paradip refinery in Odisha, which would require an estimated investment of Rs 13,805 crore. The complex will produce feedstock chemicals used for manufacturing a variety of products ranging from clothes, pet bottles, adhesives to synthetic leathers and food packaging material. The project is expected to be complete by 2024.