Indian Oil profit surges 211% to Rs 5,941 crore in the first quarter of current fiscal on inventory gains

State-run Indian Oil Corporation (IOCL) reported a net profit of Rs 5,941.4 crore on a standalone basis for the quarter ended June 30, recording a 210.9% rise from the same period a year ago. The oil refining and marketing company attributed the increase in profit to inventory gains, stemming from fluctuations in global oil prices and rising margins of petrochemical products.

The company’s board has also approved the diversification of IndianOil Petronas (IPPL), a joint venture of IOCL and Malaysia-based Petronas, into auto-fuel retailing business in India. IPPL currently focuses mainly on operating LPG import terminals at Haldia and Ennore.

As retail prices of petroleum products are mapped with international rates, a gradual rise of global oil prices in Q1FY22 meant that by the time IOCL sold its products after processing crude, retail rates had increased. Without disclosing the exact inventory gain figures for the quarter, IOCL chairman SM Vaidya said the company’s gross refining margin in the quarter, which included the impact of inventory gains, was $6.58/barrel against the negative margin of $1.98/barrel in the corresponding quarter in FY21.

IOCL had recorded an inventory loss of Rs 3,196 crore in Q1FY21. Owing to rising global crude prices and very high government taxes, petrol and diesel are currently being sold at their all-time high rates.

IOCL sold 18.8 million tonnes of petroleum products in the quarter, marking an annual rise of 21.3%. The company’s revenue in the period jumped 73.7% annually to Rs 1.56 lakh crore, while expenses dropped by 70% to Rs 1.48 lakh crore. Tax expenses in the quarter increased 158.8% annually to Rs 1,857.1 crore. IOCL spent around Rs 4,000 crore in the quarter in capital expenditure. The full-year capex target of the company in FY22 is Rs 28,500 crore. IOCL also commissioned 122 new fuel retail outlets in the June-quarter.

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