Q1 results: Indian Oil profit jumps 50% on inventory gains

Excluding the inventory gain, Indian Oil’s gross refining margin stood at $5.18 per barrel in Q1 compared to $6.44 a barrel a year ago. Photo: Priyanka Parashar/Mint

Excluding the inventory gain, Indian Oil’s gross refining margin stood at $5.18 per barrel in Q1 compared to $6.44 a barrel a year ago. Photo: Priyanka Parashar/Mint

New Delhi: Indian Oil Corp. Ltd, the nation’s biggest oil firm, has reported a 50% jump in June quarter (Q1) profit as inventory gains negated lower refining margins. Indian Oil’s consolidated net profit rose to ₹ 6,831 crore in Q1 2018-19 compared with ₹ 4,549 crore in the same period last fiscal, the company said in a statement in new Delhi.

“The variation is majorly on account of higher inventory gains of ₹ 7,866 crore during the current quarter, which is partly compensated by lower refining margins and exchange losses,” Indian Oil 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.

Indian Oil ‘s Q1 results showed revenue from operations, or turnover, rose to ₹ 149,747 crore in Q1 FY19 from ₹ 128,183 crore in Q1 FY18. The oil marketing company (OMC) earned $10.21 on turning every barrel of crude oil into fuel in the quarter as compared to $4.32 per barrel gross refining margin (GRM) in the year-ago period. Excluding the inventory gain, the GRM stood at $5.18 per barrel in Q1 compared to $6.44 a barrel a year ago.

In Q1 FY18, the company had booked inventory losses and so GRM excluding them is higher.

According to chairman Sanjiv Singh, Indian Oil sold 21.6 million tonnes of petroleum products in the domestic market during Q1, up 4.3% 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 FY18. Pipeline throughput was up 7% at 22.8 million tonnes.

Indian Oil’s debt stood at ₹ 44,797 crore as on 30 June with a debt to equity ratio at 0.39:1. It did not give the previous year’s borrowing numbers. Its capital expenditure in Q1 was ₹ 5,852 crore as against target of ₹ 22,862 crore for FY19. The finance cost for the quarter ended 30 June 2018 was ₹ 1,031 crore as compared to ₹ 739 crore in the June quarter of 2017-18.

First Published: Sun, Aug 12 2018. 01 12 PM IST

Source: Livemint