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Inventory losses from sourcing crude oil at higher prices have pushed IndianOil into posting a net loss of ₹898.46 crore for the second quarter of fiscal 2014-15. In the same quarter last year, the company recorded a net profit of ₹1,683.92 crore.
Crude oil prices have been on a downward spiral over the last couple of months. IndianOil typically maintains a storage of 30 days (16 in tanks and 14 in transit). It sources 75 per cent of its requirement via long-term contracts and the remaining through spot.
As a result, IndianOil suffered an inventory loss of ₹4,272 crore in the second quarter, against a gain of ₹4,654 crore in the same quarter last year. The inventory loss led to IndianOil’s gross refinery margin slipping to a negative $ -1.95 a barrel, against $7.43 per barrel in the same quarter last year.
Adjusting over-recovery“GRMs have been badly impacted by the inventory loss which was due to the falling prices of crude oil. The actual physical performance of the refineries has been much better than last year,” said B Ashok, Chairman, IndianOil.
During the quarter the company's net revenue stood at ₹1,11,664 crore, around 1.3 per cent higher than the ₹1,10,204 crore in the same quarter last year. Meanwhile, the company will absorb the excise duty hike of ₹1.5 per litre on diesel and petrol. “At this point of time, there is no change in the retail selling price of petrol and diesel. When we discuss the price revision in the next fortnight, it will be taken into account. But, for now, the excise duty hike will be adjusted against the over-recovery,” said Ashok.
On the company’s expansion plans, Ashok said that it intends to commission the Paradip refinery by February. The refinery’s completion has been delayed several times leading to overrun in projected costs.
While acknowledging there is some trouble with certain utility contractors, Ashok said: “In terms of overall completion, we are at 97.2 per cent. I am confident we will commission the refinery by February and the first products will start selling a couple of weeks thereafter. But 100 per cent commissioning will take another 6-8 months after February.”
On Thursday, IndianOil’s shares closed at 4.4 per cent higher at ₹346.40 on the BSE.
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