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IOC Q2 profit tanks 83% to Rs 563 crore on inventory loss, lower refining margin

Analysts in an ETNOW poll had projected a net profit of Rs 3,710 crore.

, ET Bureau|
Updated: Oct 31, 2019, 07.14 PM IST
IOC Q2 profit plunges 83% YoY to Rs 563 cr
IOC Q2 profit plunges 83% YoY to Rs 563 cr
New Delhi: Indian Oil’s second-quarter profit slumped 83% to Rs 564 crore mainly due to inventory loss and lower refining margin.

Revenue also fell to Rs 1,32,376 crore in the July-Sept quarter, down 13% from a year earlier, for the country’s largest refiner and fossil fuel retailer. “The variation is majorly on account of inventory loss during current quarter against inventory gain during corresponding quarter of previous financial year,” Indian Oil Chairman Sanjiv Singh said.

The company reported an inventory loss of Rs 1807 crore for the quarter as against an inventory gain of Rs 2895 crore in the corresponding quarter last year.

Indian Oil’s gross refining margin for the quarter shrank to $1.28 per barrel from $6.79 per barrel. “On physical performance, refineries operated perfectly well but because of lower cracks, GRM was lower,” Singh said, adding that the cracks have begun improving.

Singh said petrol demand has been robust but diesel has been fluctuating this year. Consumption of petrol and diesel have risen 9.1% and 1.1% respectively in the first half of 2019-20 in the country but demand seems to be decelerating in recent months. Petrol demand growth has dropped to 6.2% and diesel demand contracted by 3.3% in September. Total oil demand has contracted 0.3% in September but rose in April-September period by 1.4%.

Singh said the second quarter was normally a low-demand period for diesel and a heavy and extended monsoon had impacted road movement seriously in many parts of the country, which cut demand for diesel. Singh didn’t give a demand outlook for the second half of the year.

On whether Indian Oil will be interested in buying the government’s stake in BPCL, Singh said, “It will very much depend on how the bundle is offered.”

Indian Oil is planning to operate some fuel retail stations in Saudi Arabia and has just entered a partnership with a local firm there. A pilot is underway and once the joint venture obtains the license, it would launch its filling stations. Indian Oil already has lube marketing business in Saudi Arabia.

Indian Oil has also begun supplying IMO-2020 compliant marine fuel with 0.5% Sulphur at Indian ports. The first supply was made at Kandla port last week. Bunker fuel deliveries at other Indian ports of Mumbai, Mangalore, Tuticorin, Chennai, Visakhapatnam, Paradip and Haldia shall start by mid-November 2019.
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