With substantial drop in inventory losses and sizable increase in petrochemical businesses, State-owned biggest fuel retailer Indian Oil Corp (IOC) on Friday posted a record net profit of Rs10,399 crore in 2015-16, claiming to become country’s second most profitable public sector unit (PSU) despite having poor numbers in March quarter earnings.
Commenting on the overall annual performance of the company, IOC Chairman B Ashok told reporters here that IOC fourth quarter net profit in 2015-16 was robust and the company reported Rs10,399.03 crore in fiscal year ended March which was almost double of Rs5,273.03 crore net profit in the previous fiscal.
When asked about reasons behind such great performance, Ashok said, “We have had an outstanding year in terms of both operating performance and profit. The biggest factor of such profit realisation is due to lowering our inventory losses and substantial increase in petrochemical businesses of the corporation.”
Maintaining its leadership position with 45.5 per cent market share in the sector, the company said that net profit of Rs10,399.03 crore in fiscal year ended March 31, 2016 was second only to IOC’s Rs16,004 crore net profit in 2015-16 fiscal. Refineries processed a record 56.2 million tons of crude oil 2015-16, up from 53.6 million tons in the previous year while fuel sales soared 6 per cent to record 72.7 million tons.
Ashok added that petrochemical sales were up 2 per cent to 2.538 million tons, while turnover dipped 11.4 per cent to Rs450,738 crore on back of drop in oil prices. “The profit in 2015-16 is the highest ever and better than Rs10,200 crore profit in 2009-10,” he said.
The profit was aided by sharp drop in revenue loss or under-recoveries on sale of lPG and kerosene because of crash in international oil prices. Under-recoveries dropped from Rs39,758 crore in 2014-15 to Rs7,757 crore in 2015-16. All but Rs9 crore of the under-recoveries were met by the Government’s subsidy or dole from upstream firms like ONGC.
Ashok further said that debt had come down to Rs52,469 crore as on March 31, 2016 from Rs55,248 crore a year earlier. Also, the company has cut down on procurement cost and inventory losses for the full year have almost halved to Rs9,731 crore.
But for the January-March quarter, IOC posted an 80 per cent drop in net profit to Rs 1,235.64 crore. “This was due to inventory loss of Rs3,335 crore as against Rs871 crore inventory loss in Q4 of 2014-15,” he said adding there was also a provision of Rs881 crore made for impairment of asset following sharp fall in crude oil prices.
Also, Rs612 crore has been provisioned for increase in rental for petrol pumps in the national capital. “For oil companies profitability should be looked at from the point of view of the full year,” he said.
The company earned $8.7 on turning every barrel of crude oil into fuel in the January-March quarter, up from a gross refining margin of $3 a barrel a year earlier. low oil prices meant turnover dropped to Rs80,449.57 crore in the fourth quarter of 2015-16 fiscal from Rs93,830.13 crore a year ago. Meanwhile, shares of Indian Oil closed 3.01 per cent up at Rs414.05 apiece on BSE.