IOC Q1 net up 50% on inventory gains

New Delhi: Indian Oil Corp (IOC), the nation's biggest oil firm, reported a 50 per cent jump in its April-June quarter net profit as inventory gains negated lower refining margins. Consolidated net profit at Rs 6,831 crore in the first quarter of the current 2018-19 fiscal compared with Rs 4,549 crore net in the same period of the previous financial year, the company said in a statement here.

"The variation is majorly on account of higher inventory gains of Rs 7,866 crore during the current quarter, which is partly compensated by lower refining margins and exchange losses," it said.

Inventory gains result when a company buys crude oil (raw material) at a particular price but by the time it is able to transport it to its refinery and turn it into fuel, international rates have moved up. Since, fuel is priced at prevailing benchmark international rate, an inventory gain is booked. In case of reverse, inventory loss is booked.

Revenue from operations or turnover rose to Rs 1,49,747 crore in Q1 FY 2018-19 from Rs 1,28,183 crore in the corresponding quarter of FY 2017-18.

IOC earned USD 10.21 on turning every barrel of crude oil into fuel in the quarter as compared to USD 4.32 per barrel gross refining margin (GRM). Excluding the inventory gain, the GRM stood at USD 5.18 per barrel in Q1 compared to USD 6.44 a barrel in the corresponding quarter of the previous year.

In Q1 2017-18, the company had booked inventory losses and so GRM excluding them is higher.

IOC Chairman Sanjiv Singh said the company sold 21.6 million tonnes of petroleum products in the domestic market during Q1, up 4.3 per cent over 20.7 million tonnes a year ago.

Its refineries processed 17.6 million tonnes of crude, marginally higher than 17.5 million tonnes throughput in Q1 2017-18. Pipeline throughput was up 7 per cent at 22.8 million tonnes.