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Indian Oil Corporation has reported a net profit of ₹3,056 crore for the third quarter of fiscal 2015-16 as its inventory loss came down significantly from the same quarter last year.
The company had reported a net loss of ₹2,636 crore in the same quarter last year.
IndianOil’s swung to a net profit despite a 22 per cent drop in net revenues during the quarter to ₹83,461 crore from ₹1,07,073 crore in the same quarter last year.
The drop in net revenues was primarily due to the fall in international prices of petroleum products, said B Ashok, Chairman, IndianOil. The company’s gross refining margin was $5.96 per barrel during the quarter compared to $-7.73 per barrel in the same quarter last year.
IndianOil’s board also approved an interim dividend of ₹5.5 per share.
During the third quarter, IndianOil’s inventory loss dropped 65 per cent to ₹4,477 crore compared to the ₹12,840-crore in the same quarter alt year.
Inventory losses are incurred by oil marketing companies when crude oil prices start falling. This is because companies source the crude oil at higher prices and by the time it reaches the refinery for processing and selling products, the prices have fallen. Including both crude oil and products, IndianOil has an inventory of 60 days.
“This year too we incurred an inventory loss. But it was significantly lower than last year and it has helped our performance this year,” said Ashok.
During the quarter, the company’s finance cost also dropped 34 per cent to ₹610.42 crore. Its net borrowings stood at ₹49,120 crore on December 31, 2015, compared to ₹55,000 crore on March 31, 2015.
IndianOil also benefited from a drop in under-recoveries for selling PDS kerosene at less than market rates. Under-recoveries for the quarter stood at ₹1,939 crore, and of this, ₹1,733 crore has been given by the government, while unmet under-recoveries stood at ₹206 crore.
On Friday, IndianOil’s shares closed 2.28 per cent lower on the BSE at ₹364.65.
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