Indian Oil Corporation posted a disappointing set of numbers in Q4 with profits shrinking 80 per cent to ₹1,235.64 crore and gross refining margin (GRM) shrinking to $3 per barrel. The company justified the lower Q4 profit to a massive inventory loss of ₹3, 335 crore as against ₹871 crore during the same quarter last year. Speaking to Veena Bloomberg TV India , IOC Chairman B Ashok says FY16 has been an outstanding year as the refiner booked record profits of 10,399 crore, almost double the ₹5,273 crore in FY15.

IOC’s Q4 has been pretty disappointing. Can you elaborate on the reasons for the dismal performance especially on GRM?

The GRM for the 4th quarter was $3 a barrel. But our GRM for the entire year was much better. Since we are focused on the last quarter, we had quite a bit of an inventory loss. In fact, our Q4 inventory loss has been ₹3, 335 crore as against ₹871 crore during the same quarter last year. But let me also add, we had an outstanding year — we have record profits of ₹10,399 crore in FY16 as against ₹5,273 crore for the whole of year last year. This is almost more than double of what we have done last year. And when we look at the GRM for the whole year, we have a GRM of $5.06 per barrel as against $0.27 during FY15. And if you back out the inventory effect, the GRM is $7.5 a barrel as against $6.73 last year, which is again an improvement. And if you back out the inventory effect of Q4, our GRM is $6.01 as against $3 of last year. So the adverse impact on earnings was more due to the fact that we have had a huge inventory loss in the fourth quarter as compare to Q4 of last year.

Your refining margins might not hold at the levels they are at this point and are likely to soften over the next two quarters. What is your take on the margins?

Refining margins have been pretty good otherwise. In fact, the cracks have been quite exceptional as far as gasoline is concerned during the last year, but the diesel cracks have been highly volatile. There were periods when the diesel cracks were actually very low. So these actually contributed to the lower margins besides the inventory loss. But moving forward, so far the indications are that the refinery margins are likely to remain quite robust.

What about marketing margins?

The marketing margins have also been steady during the year. Of course we have had some dip in marketing margins during the whole year. That has been a consequence of certain things. We had to import a lot of products to make sure that the robust demand in the country, which was much more than that was anticipated, was met. And because of that and due to the large number of vessels that were coming in, there are certain issues in terms of the demurrage charges, which we had to pay. But overall I think it has ensured that our volumes have gone up substantially during the last year by more than 4 million tonne. And overall we have also been able to maintain our leadership in the market place.

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