State-owned Indian Oil Corporation (IOC) today reported an 18 per cent rise in second quarter net profit on the back of higher refining margin and inventory gains.
Net profit in July-September at Rs 3,696.29 crore, or Rs 7.80 per share, was 18.4 per cent higher than Rs 3,121.89 crore, or Rs 6.59 a share, in the year-ago period, IOC Chairman Sanjiv Singh told reporters here.
"Our sales increased and we recorded robust refining margins in the second quarter," he said.
IOC earned USD 7.98 on turning every barrel of crude oil into fuel in the quarter compared to USD 4.32 per barrel gross refining margin (GRM) in the same period last fiscal.
The company also had an inventory gain of Rs 1,056 crore in July-September as against a loss of Rs 686 crore in the previous fiscal, he said.
Inventory gain kicks in when a company buys crude oil at a particular rate, but by the time it is able to process and turn it into fuel, the rates have gone up, resulting in higher value for the product. Reverse of this results in inventory loss.
Singh said that since petrol, diesel and jet fuel (ATF or aviation turbine fuel) have been kept out of the goods and services tax (GST) regime, the company had a Rs 300 crore hit on pre-tax profits.
Under GST, tax paid on inputs can be set off against tax due on final product. But since the three fuels along with crude oil and natural gas are out of GST, any tax they pay on input goods and services cannot be recovered or set off against final tax on products, resulting in a loss.
Domestic fuel sales rose to over 19 mt from 18.46 mt while exports rose 52 per cent to 1.877 mt. IOC's refineries turned 16.1 mt of crude oil into fuel in the second quarter compared to a throughput of 15.6 mt in July-September 2016.
Revenues soared to Rs 1.1 lakh crore from Rs 1 lakh crore last year.
Singh said IOC sold 43.39 mt of products, including exports, during the first six months of 2017-18.
"Our refining throughput for H1 2017-18 was 33.617 mt and the throughput of the corporation's country-wide pipelines network was 40.696 mt during the same period," he said.
The GRM during April-September was USD 6.08 per barrel as against USD 7.19 per bbl in the corresponding period of 2016- 17.
Income from operations of Rs 2,38,828 crore for the first half of 2017-18 was higher than Rs 2,07,458 crore in the year-earlier period.
Net profit for the half year ended September is Rs 8,245 crore compared to Rs 11,391 crore during the corresponding period of the previous year, mainly due to inventory losses during the current period as against inventory gains during the first half of 2016-17, he added.
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