Indian Oil profit tanks 83% as refining margins shrink

Reuters
New Delhi, India Updated: Oct 31, 2019, 08:43 PM(IST)

Indian Oil logo Photograph:( Reuters )

Story highlights

September quarter inventory losses stood at 18.07 billion rupees, against a gain of 28.95 billion rupees year ago.

Indian Oil Corp Ltd, the country's top refiner, posted an 82.7 per cent slump in second-quarter profit on Thursday, missing estimates widely, due to higher inventory losses and lower refining margins.

Net profit was at 5.63 billion rupees in the quarter ended September 30, compared with 32.47 billion rupees a year earlier, state-owned IOC said in a filing.

Quarterly results were impacted due to inventory losses in the three months ended September 30 against inventory gains year ago, company chairman Sanjiv Singh said.

September quarter inventory losses stood at 18.07 billion rupees, against a gain of 28.95 billion rupees year ago.

International crude prices fell 8.7 per cent during the quarter ended September 30, while the refiner bought the commodity at a much higher price.

Average gross refining margin - the difference between the cost of crude oil processed and the prices of refined products - shrank to $1.28 per barrel for the July-Sept period from $6.79 per barrel a year earlier.

Singh said GRMs were impacted due to lower product margins.

Indian retail prices for gasoline and gas oil are linked to their respective benchmarks in Singapore and the Arab Gulf.

Analysts on average had expected a profit of 39.71 billion rupees, according to Refinitiv data.

Revenue from operations fell 13.2 per cent to 1.32 trillion rupees.

IOC, along with its subsidiary Chennai Petroleum controls about a third of India's 5 million barrels per day refining capacity.

Fuel demand in the world's third-largest consumer fell to its lowest in more than two years in September, data from the Petroleum Planning and Analysis Cell (PPAC) showed.

Recently, Indian government relaxed rules for setting up fuel stations in the country after a gap of 17 years, opening the sector to non-energy companies, which has been dominated by state refiners - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp.

Singh said new rules will enhance competition in the market and benefit consumers.

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