Indian Oil Q2 net slumps 99% to ₹180 cr. on lower refining margin, flat sales, LPG under-recoveries 

State-owned Indian Oil Corporation reported standalone net profit slumped almost 99% year-on-year to ₹180.01 crore for the September quarter on the back of lower refining margins, flattish product sales and under-recoveries on cooking gas.

The downward spiral compared to the ₹12,967.32 crore of the year-earlier period and ₹2,643.18 crore in the previous, June quarter, came on lower revenue from operations at ₹1,95,148.94 crore (₹2,02,312.04 crore). Operating margin plummeted year on year to 0.03% (8.91%).

Indian Oil cited inventory losses besides lower refining margins reasons for fall in net profit. Product sales volumes, including exports, for the country’s leading fuel retailer stood at 22.961 million tonnes (23.24 MT). In the June quarter, domestic market product sales alone totalled 24.063 MT.

July-September quarter is marked by monsoon in most of the country that also results in lower fuel sales, especially dip in diesel offtake. For the second quarter, refining throughput of Indian Oil was 16.738 MT (17.772 MT) while throughput of the oil major’s countrywide pipeline network was 23.985 MT (23.870 MT).

On under-recoveries, the oil major said it had a cumulative net negative buffer of Rs.8,870.11 crore as on September 30 since the retail selling price was less than market determined price of liquefied petroleum gas (LPG) cylinders. Consequently, revenue to this extent has not been recognised.

Indian Oil reported ₹448.78 crore loss on a consolidated basis for the second quarter as against net profit of ₹13,713.08 crore in the earlier year. Revenue from operations totalled ₹1,98,615.80 crore (₹2,05,283.03 crore).

For the six months ended September, standalone net profit declined to ₹2,823.19 crore (₹26,717.76 crore) on revenue from operations of ₹4,11,137.70 crore (₹4,23,457.46 crore) mainly on account of inventory losses, reduced refining margins affected by lower cracks in line with the international trends and suppressed marketing margins. Gross refining margin during April – September 2024 was $4.08 per barrel ($13.12 per bbl).

In the notes accompanying the results, the company said the Principal Controller of Defence Accounts (PCDA) had raised a claim for the price differential on supplies made between January 2022 to March 2023. The company has been contesting the claim through the Ministry of Petroleum and Natural Gas. “Meanwhile, PCDA has unilaterally deducted ₹2,690 crore from the payments for ongoing supplies. The matter is still under deliberation, and the financial impact, if any, will be addressed once the issue is resolved.”

Published - October 28, 2024 09:12 pm IST